• The following words and terms - wherever mentioned in this Law - shall have the meanings specified next to each of them unless the context requires otherwise:

  • Law: Bankruptcy Law.

  • Regulation: Implementing Regulation of the Law.

  • Court: Commercial Court.

  • Ministry: Ministry of Commerce.

  • Minister: Minister of Commerce.

  • Person: Natural or legal person.

  • Debtor: A person who has a debt established against them.

  • Creditor: A person who has a debt established in the debtor's liability.

  • Debt: The financial obligation established in the debtor's liability.

  • Small Debtor: A debtor who meets the criteria set by the Bankruptcy Committee in coordination with the Small and Medium Enterprises General Authority.

  • Owner: A person who owns a share or stock in the debtor's capital.

  • Related Party:

    • 1- The debtor's manager, board member, and those in similar positions, the debtor's partner and owner, and relatives of these persons and the debtor up to the third degree.

    • 2- Anyone who has a business relationship with the debtor.

    • 3- A person who is controlled by another person or persons - directly or indirectly - who owns more than fifty percent of the capital of each.

    • 4- A person who controls the debtor - directly or indirectly - with ownership exceeding fifty percent of the debtor's capital.

    • 5- A person who is controlled by the debtor - directly or indirectly - with ownership exceeding fifty percent of their capital.

  • Distressed: A debtor who has stopped paying a debt due at its maturity.

  • Bankrupt: A debtor whose debts have consumed all their assets.

  • Organized Entity: A person licensed to conduct financial activities or manage a public facility, as stated in Article (3) of the Law.

  • Competent Authority: The authority responsible for regulating the activities of the organized entity and overseeing it.

  • Bankruptcy Trustee or Trustee: A person appointed by the court or the applicant - as the case may be - to perform the tasks and duties assigned to them according to the type of procedure, including the financial reorganization trustee and the liquidation trustee.

  • List of Bankruptcy Trustees: A list prepared by the Bankruptcy Committee that includes bankruptcy trustees or trustees who meet the conditions specified by the Regulation.

  • List of Experts: A list prepared by the Bankruptcy Committee that includes experts who meet the conditions specified by the Regulation.

  • Preventive Settlement Procedure: A procedure aimed at facilitating the debtor's agreement with their creditors to settle their debts while the debtor retains management of their activity.

  • Financial Reorganization Procedure: A procedure aimed at facilitating the debtor's agreement with their creditors on the financial reorganization of their activity under the supervision of the financial reorganization trustee.

  • Liquidation Procedure: A procedure aimed at identifying creditor claims, selling the bankruptcy assets, and distributing the proceeds to creditors under the management of the liquidation trustee.

  • Administrative Liquidation Procedure: A procedure aimed at selling bankruptcy assets that are not expected to yield proceeds sufficient to cover the costs of the liquidation procedure or the liquidation of small debtors, under the management of the Bankruptcy Committee.

  • Assets: Movable and immovable property, intellectual property rights, and financial rights owed by others, whether due or deferred, and rights pertaining to any of them, and anything else that may have current or future financial value.

  • Bankruptcy Assets: The debtor's assets at the date of opening any of the bankruptcy procedures stipulated in the Law or during the course of any of them.

  • Suspension of Claims: The suspension of the right to take or complete any action, transaction, or lawsuit against the debtor or their assets or the guarantor of the debtor's debt, during a specified period according to the provisions of the Law.

  • Bankruptcy Debts: The debts established against the debtor at the date of opening any of the liquidation procedures stipulated in the Law or arising from contracts or obligations prior to the date of opening any of these procedures, including debts of a natural person debtor arising from conducting commercial or professional activities aimed at making a profit or other debts.

  • Commercial Activities: The commercial activities stipulated in the relevant regulations.

  • Professional Activities: Activities carried out by a person for their own account as a profession based on experience, qualification, talent, or skill, without being bound by an employment contract with the beneficiary that subjects them to their dependency, responsibility, and supervision.

  • Bankruptcy Register: A register established, maintained, and managed by the Bankruptcy Committee according to the provisions of the Law.

  • Court Deposit: The act of the trustee - agreed upon by the small debtor or the competent authority - delivering to the court a decision issued by the person they agreed with to open the financial reorganization procedure for small debtors or the liquidation procedure for small debtors - fulfilling the legal requirements - and the court's acceptance of the deposit.

  • Proposal: The presentation of the preventive settlement procedure or the preventive settlement procedure for small debtors or the financial reorganization procedure or the financial reorganization procedure for small debtors that is voted on.

  • Plan: The accepted or ratified proposal, according to the type of procedure.

This Law aims to regulate the following bankruptcy procedures:
1. Protective settlement.
2. Financial restructuring.
3. Liquidation.
4. Small debtors' protective settlement.
5. Small debtors' financial restructuring.
6. Small debtors' liquidation.
7. Administrative liquidation.

1. The following shall be considered regulated entities under this Law:
a) Banking, financing, insurance, and exchange companies.
b) Persons licensed to trade in securities.
c) The Capital Market, and the financial settlement, clearing, and deposit companies.
d) Credit rating companies.
e) Credit information and records companies.
f) Telecommunication, water, electricity, and gas companies.
g) Companies exploring minerals and energy resources.
h) Companies operating airports, railways, seaports and the like, as specified in the Regulations.
i) Special purpose facilities.
j) Other persons specified in the Regulations.
2. A petition for the initiation of a bankruptcy procedure or a judicial depository for a regulated entity debtor shall not be registered without the issuance of a decision of approval by the competent authority.
3. The competent authority shall, upon completion of the application, issue a decision approving or rejecting the petition within a period not exceeding 30 days. The petition shall be deemed approved if the competent authority fails to issue a decision within such period.
4. The court shall have jurisdiction to hear lawsuits arising from the decision of the competent authority, pursuant to paragraph (3) of this Article.

This Law shall apply to:
a) natural persons engaging in commercial or professional activities, or any other for-profit activities in the Kingdom;
b) commercial and professional companies, regulated entities, as well as other companies and for-profit entities registered in the Kingdom; and
c) non-Saudi investors of a natural or legal personality holding assets in the Kingdom, or engaging in commercial or professional activities, or any for-profit activities through a licensed establishment in the Kingdom. This Law shall only apply to said investors’ assets which are located in the Kingdom.

Bankruptcy procedures shall aim to:
a) enable a debtor who is bankrupt, distressed, or is likely to suffer financial difficulties to benefit from the bankruptcy procedures, restructure his financial position, resume his business, and contribute to economic development;
b) protect creditors’ rights in a manner that ensures fair treatment;
c) maximize the value of bankruptcy assets, conduct proper procedures for the sale thereof, and ensure fair distribution of sale proceeds among creditors upon liquidation;
d) reduce the costs and duration of procedures and increase their efficiency, especially in restructuring the financial position of small debtors, or the sale of bankruptcy assets, and the distribution of sale proceeds among creditors in a fair manner within a specified period;
e) undertake administrative liquidation of a debtor whose assets are not expected to cover the costs of the liquidation procedure or the liquidation of small debtors.

The court shall issue judgements and decisions necessary for the application of the procedures stipulated in this Law, oversee the implementation thereof, decide disputes arising therefrom, and impose the penalties prescribed in this Law.

1. Subject to Article 4 of this Law, no person shall be liquidated under any other law unless he is not distressed and his assets are sufficient to cover all his debts.
2. If the debtor undergoes a voluntary dissolution or liquidation in violation of paragraph (1) of this Article, members of the debtor’s board of directors or board of managers, and the like, shall be jointly and severally liable for any of the debtor's outstanding debts.
3. Voluntary liquidation, in violation of paragraph (1) of this Article, must not be included in the agenda of the debtor’s general assembly or shareholders’ assembly for voting.
4. The Regulations shall specify the provisions necessary for the implementation of this Article.

The Regulations shall specify the provisions relating to transborder bankruptcy procedures.