Conditions for Conducting Economic Bankruptcy According to the Saudi Bankruptcy System of the Year 1439 AH

Dr. Adnan Salih Al-Omar
Associate Professor of Commercial Law – Qassim University – KSA
Dr. Ahmad Aqeil Alzaqibh
Assistant Professor of Public Law – College of Law – Yarmouk University – Jordan


There is no doubt that bankruptcy is one of the basic guarantees established to protect credit and confidence in commercial operations. The concept of bankruptcy was previously limited to commercial activity alone without referring to other economic activities. However, the recent Saudi regulator in the new Saudi bankruptcy system for the year 1439 AH ​​subjected all economic projects that aim to achieve material profits to the scope of bankruptcy. This is what prompted us to adopt the term “economic bankruptcy.” The Saudi regulator stipulated this matter in accordance with the Model Insolvency Law (UNCITRAL) for the year 1997 AD, and many foreign and Arab laws.
On the other hand, the Saudi regulator deviated from the general principle of bankruptcy where a court ruling is no longer required in regards to the debtor’s bankruptcy when unable to pay the debt; rather, it introduced a number of procedures starting with preventive settlement and ending with liquidation. It also stipulated that any of these procedures can be requested when substantive and other formal conditions are met. This has prompted us to research the general conditions for these procedures in the Saudi bankruptcy system and examine them, and to address their suitability to request any of these procedures.
This study concluded with a number of recommendations, some of which came in the form of proposals to amend some texts of the articles related to this matter. The most prominent of which include the necessity to establish a balance between the interests of debtors and creditors alike, as well as stipulating the right of the Public Prosecution Office to request liquidation procedures to be taken when its conditions are met.

Keywords: financial default, preventive settlement, liquidation, financial reorganization, invested assets.

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