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vision 30 2*30 المركبه العربيه السعوديه KINGDOM OF SAUDI ARABIA وزاره التجاره Ministry of Commerce Bankruptcy Law [Non-Text] وزاره التجاره Ministry of Commerce VISION & JIG 23:30 ال Estimates المطليه للشركه KINGDOM OF SAUDI ARABIA Bankruptcy Law Chapter 1: General Provisions Article 1 In this Law, the following terms and phrases shall have the meanings assigned thereto, unless the context requires otherwise: Law: Bankruptcy Law. Regulations: Implementing Regulations of this Law. Court: Commercial Court. Ministry: Ministry of Commerce and Investment. Minister: Minister of Commerce and Investment. Person: A natural or legal person. Debtor: A person who is proven to owe a debt to another person. Creditor: A person to whom a debt is proven to be owed by a debtor. Debt: A financial obligation proven to be owed by a debtor. 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 holds a stake or a share in the debtor's capital. Related Party: 1. The debtor's manager, member of his board of directors, or the like; partner; owner; and the relatives to the third degree of the foregoing persons and the debtor. 2. A person who has a business relationship with the debtor. 3. A person who is controlled, directly or indirectly, along with the debtor by another person(s) holding over 50% of the capital of each of them. 4. A person who, directly or indirectly, controls the debtor by holding over 50% of his capital. 5. A person who is, directly or indirectly, controlled by the debtor by holding over 50% of his capital. Distressed Debtor: A debtor who stopped paying a due debt on its maturity date. Bankrupt: A debtor whose debts have consumed all of his assets. Regulated Entity: A person who is licensed to engage in a financial activity, or who manages a public facility in accordance with the provisions of Article 3 of this Law. Competent Authority: The authority in charge of regulating, monitoring, and overseeing the business of the regulated entity. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه f@SaudiMCI www.mci.gov.sa 2 [Non-Text] وزاره التجاره Ministry of Commerce VISION 30 ال Estimates الديمراتيل KINDGOM OF SAUDI ARABIA Bankruptcy Trustee or Trustee: A person who is appointed by the court or the petitioner, as the case may be, to perform the tasks and duties assigned to him according to the type of procedure, including the financial restructuring trustee and the liquidation trustee. Bankruptcy Trustee List: A list prepared by the Bankruptcy Committee which includes bankruptcy Trustees or Trustees who satisfy the conditions specified in the Regulations. List of Experts: A list prepared by the Bankruptcy Committee which includes experts who satisfy the conditions specified in the Regulations. Protective Settlement Procedure: A procedure which aims to facilitate an agreement between the debtor and his creditors to settle his debts, where the debtor maintains the right to manage his business. Financial Restructuring Procedure: A procedure which aims to facilitate an agreement between the debtor and his creditors for the financial restructuring of the debtor's business under the supervision of the financial restructuring trustee. Liquidation Procedure: A procedure which aims to list the claims of creditors, selling the bankruptcy assets, and distribute the proceeds thereof among creditors under the supervision of the liquidation trustee. Administrative Liquidation Procedure: A procedure which aims to sell bankruptcy assets whose sale proceeds are not expected to cover the charges of the liquidation procedure or the small debtors' liquidation procedure under the supervision of the Bankruptcy Committee. Assets: Movable and immovable assets, intellectual property rights, current or future receivables, and any rights attached thereto, as well as other assets which may have current or future financial value. Bankruptcy Assets: The debtor's assets on the date of initiation of any of the bankruptcy procedures provided for in this Law or during the validity of any of the bankruptcy procedures. Moratorium: Suspension of the right to take or complete any procedure, action, or lawsuit against the debtor, his assets, or the guarantor of his debts during a specific period stipulated in this Law. Bankruptcy Debts: Debts proven to be owed by the debtor at the date of initiation of any of the liquidation procedures stipulated in this Law, or arising from contracts or liabilities prior to the date of initiation of any of such procedures, including debts of a natural person debtor arising from commercial or professional activities, any activity aiming to generate profit, or other debts. Commercial Activity: Any of the commercial activities provided for in relevant laws. Professional Activity: Any activity practiced by a person as a profession for his own account, based on expertise, qualification, talent, or skill, without an employment contract with a beneficiary rendering him a subordinate thereto or subject to his control and supervision. Bankruptcy Register: A register which is created, managed, and maintained by the Bankruptcy Committee under this Law. Judicial Depository: A submission to the court by the trustee, who is assigned by the small debtor or the competent authority, of a decision issued by those who have assigned him to initiate a financial restructuring procedure or a small debtors' liquidation procedure, in compliance with the legal requirements and subject to the court's approval of depositing the same. Proposal: A proposal for the initiation of a protective settlement procedure, small debtors' protective settlement +966 11 294 4444 | Riyadh 11162 f@SaudiMCI 3 Kingdom of Saudi Arabia | المملكه العربيه السعوديه www.mci.gov.sa [Non-Text] وزاره التجاره Ministry of Commerce VISION 30 ال Estimates المطلوبات المطلوبات KINGDOM OF SAUDI ARABIA procedure, financial restructuring procedure, or small debtors' financial restructuring procedure, which shall be voted on. Plan: An approved or confirmed proposal, depending on the type of procedure. Article 2 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. Article 3 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. +966 11 294 4444 | Riyadh 11162 f@SaudiMCI Kingdom of Saudi Arabia | المملكه العربيه السعوديه www.mci.gov.sa 4 [Non-Text] وزاره التجاره Ministry of Commerce VISION d...gJ 2×30 الحديه العربيه السعوديه KINDOM OF SAUDI ARABIA Article 4 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. Article 5 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. Article 6 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. Article 7 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. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه f@SaudiMCI www.mci.gov.sa 5 [Non-Text] وزاره التجاره Ministry of Commerce VISION and 230 الوكاله العربيه السعوديه KINGDOM OF SAUDI ARABIA Article 8 The Regulations shall specify the provisions relating to transborder bankruptcy procedures. Chapter 2: Bankruptcy Committee Bankruptcy Committee: Formation and Powers Article 9 1. Pursuant to a resolution by the Council of Ministers, a committee named the Bankruptcy Committee shall be formed, comprising five or more experienced and qualified members nominated by the Minister for a three-year renewable term. The Committee shall enjoy a legal personality, as well as financial and administrative autonomy under the supervision of the Minister. 2. The Bankruptcy Committee shall, in addition to the technical and administrative powers provided for in this Law, have the following powers: a. Creating, maintaining, and managing the Bankruptcy Register. b. Licensing bankruptcy trustees and experts in accordance with the Regulations. c. Preparing a list of bankruptcy trustees and a list of experts in accordance with the Regulations. d. Issuing rules governing the work of bankruptcy trustees and experts. e. Inspecting and verifying any bankruptcy procedure initiated in accordance with this Law. f. Submitting to the Minister its recommendations for the update of the list of regulated entities, upon coordination with the competent authorities. g. Setting the criteria for small debtors in coordination with the Small and Medium Enterprises General Authority. h. Determining the minimum amount of debt that gives the creditor the right to file a petition for the initiation of liquidation procedures. i. Managing the administrative liquidation procedures. j. Creating, maintaining, and managing the register referred to in Article 204(2) of this Law. k. Issuing the forms and documents provided for in this Law and its Regulations. 1. Organizing and sponsoring initiatives which promote awareness of this Law. m. Making the proposals necessary to enhance the effective implementation and development of the provisions of this Law, including conducting studies and research. n. Organizing activities and participating in events relating to its functions. o. Conducting periodic reviews of the provisions of this Law and its Regulations as well as relevant rules and instructions, coordinating with the relevant agencies, and proposing amendments to the Minister. p. Providing consultation, training, and other services for a consideration or free of charge. q. Assuming any other power provided for in the Regulations or its formation decision. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه f@SaudiMCI www.mci.gov.sa 6 [Non-Text] وزاره التجاره Ministry of Commerce VISION 2x30 ال Estimates المطلوبات المطلوبات KINDOM OF SAUDI ARABIA Article 10 1. The Bankruptcy Committee's work rules and procedures shall be issued pursuant to a decision by the Minister, and shall include: a. Rules and procedures for inviting to and holding its meeting, voting on its decisions, preparing its meeting minutes, and the like. b. Establishing a general secretariat for the Committee, defining its duties, and its work rules and procedures. 2. The Bankruptcy Committee shall submit periodic reports to the Minister on its activities, achievements, challenges, and any recommendations for the efficient and effective exercise of its powers and performance of its duties. Article 11 In the performance of its duties, the Bankruptcy Committee may: a. seek the assistance of experts and specialists; and b. delegate certain executive and administrative powers to whom it deems appropriate. Bankruptcy Committee Financial Recourses Article 12 1. The Ministry shall provide the Bankruptcy Committee with the financial resources necessary to exercise its powers and perform its duties, including remuneration of Committee members and allocations for contracting with experts, specialists, and employees, and shall provide the Committee with suitable premises. 2. The Bankruptcy Committee may charge fees for issuing licenses, rendering services, and organizing activities. The Minister shall determine the amount of such fees and methods of payment. 3. The Committee shall deposit its funds in an account opened under its name with one or more local banks, and shall disburse therefrom on its operations, secretariat, and employees in accordance with administrative and financial regulations set by the Committee and approved by the Minister. Chapter 3: Protective Settlement Procedure Filing Petitions for the Initiation of a Protective Settlement Procedure Article 13 1 Without prejudice to any relevant law, the debtor may file a petition with the court to initiate a protective settlement procedure if he is: a. likely to suffer financial difficulties that may lead to distress; b. distressed; or c. bankrupt. 2 A debtor shall not file a petition for the initiation of a protective settlement procedure if he has previously been subject to such procedure or to a small debtors' protective settlement procedure during the 12 months preceding the filing of the petition for the initiation of the procedure. +966 11 294 4444 | Riyadh 11162 f@SaudiMCI Kingdom of Saudi Arabia | المملكه العربيه السعوديه www.mci.gov.sa 7 [Non-Text] وزاره التجاره Ministry of Commerce VISION & JIG 230 ال Estimates المالي KINDOM OF SAUDI ARABIA Article 14 1 The petition for the initiation of a protective settlement procedure shall be registered with the court upon filing such petition along with the proposal and the relevant information and documents, as specified in the Regulations. 2 The proposal must include information on the financial position of the debtor, effects of the economic situation thereon, and classification of creditors in accordance with Article 29 of this Law. Court Powers in the Initiation of a Protective Settlement Procedure Article 15 1 The court shall set a date for considering the petition for the initiation of a protective settlement procedure within a period not exceeding 40 days from the date of filing, and shall notify the debtor of the hearing date within five days from the date of registering the petition. The court shall take any of the following decisions: a. Initiate the procedure if: I. the debtor is likely to remain in business, and the claims of creditors are likely to be settled within a reasonable time; II. the debtor is bankrupt, distressed, or is likely to suffer financial difficulties that may lead to distress; III. the debtor provides the information and documents referred to in Article 14 of this Law; or IV. the debtor has fairly and with due diligence classified the creditors into classes. b. Reject the petition if: I. the petition does not satisfy the statutory requirements, or is unjustifiably incomplete; or II. the petitioner acts in bad faith, or commits any of the offenses stipulated in this Law. If the court rejects the petition, it may order the initiation of another suitable bankruptcy procedure. c. Postpone the hearing for a period not exceeding 21 days if: I. the court requires the debtor to provide additional information or documents; or II. the court requires the debtor to amend the classification of creditors stated in the proposal in a manner that ensures fair classification. The debtor shall provide the court with the required information, documents, or the amendment of classification of creditors on the set date, prior to the date set for the postponed hearing. The court shall initiate the procedure or reject the petition in accordance with the provisions of this Article. 2 The court may, on its own motion or upon the request of the debtor or any of the creditors, summon any person who has information or documents related to the petition for the initiation of the procedure to attend the hearing. The summoned person shall provide the court with such information or documents. 3 The debtor shall notify the creditors specified in the proposal of the court's decision in accordance with the Regulations, and shall deposit a copy of the decision at the Bankruptcy Register. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه f@SaudiMCI www.mci.gov.sa 8 [Non-Text] وزاره التجاره Ministry of Commerce VISION 2019 23:30 ال Estimates المالي KINDGOM OF SAUDI ARABIA Article 16 1 In its decision to initiate a protective settlement procedure, the court shall set the date on which the creditors vote on the proposal within a period not exceeding 40 days from the procedure initiation date, unless it decides to set a later date, provided it is within a period not exceeding an additional 40 days. 2 The debtor shall publish the initiation of the procedure within seven days from the date of issuance of the court's decision to initiate such procedure. Moratorium Article 17 Upon filing a petition for the initiation of a protective settlement procedure, the debtor may petition the court to order a moratorium, provided his petition is accompanied with a report issued by a listed trustee indicating his opinion on the likelihood of majority of creditors approving the proposal as well as the feasibility of its implementation. Article 18 1 Without prejudice to the provisions of Chapter 14 of this Law, the court may order a moratorium for a period not exceeding 90 days from the procedure initiation date, and may extend such period for one or more additional thirty-day periods at the request of the debtor. In any event, the moratorium period must not exceed 180 days. 2 A moratorium period shall expire upon the lapse of the period specified in paragraph (1) of this Article, or at an earlier date by the court's confirmation of the proposal or termination of the procedure. Article 19 The debtor shall notify his creditors of the court's moratorium decision upon its issuance, and shall, during the moratorium period, exercise due diligence to convince his creditors to vote in favor of the proposal. Effects of a Moratorium Article 20 1 During the moratorium period, it shall be prohibited to take or complete: a. any procedure, action, or lawsuit against the debtor or his assets, including filing a petition for the initiation of a bankruptcy procedure; b. any enforcement procedure against any bankruptcy assets provided as security, except upon the approval of the court; c. any procedure or action against the personal guarantor or the in-kind guarantor of the debtor's debt, except upon the approval of the court; or d. any of the procedures or actions provided for in the Regulations. 2 Any procedure in violation of paragraph (1) of this Article shall be deemed null and void. 3 The court may, on its own motion or upon the request of a person with interest, order the recovery of any assets disposed of during the moratorium period, or take any other appropriate action, without prejudice to the rights of bona fide third parties. An aggrieved party may file a claim for compensation. +966 11 294 4444 | Riyadh 11162 f@SaudiMCI 9 Kingdom of Saudi Arabia | المملكه العربيه السعوديه www.mci.gov.sa [Non-Text] وزاره التجاره Ministry of Commerce VISION 30 ال Estimates المطروك KINDGOM OF SAUDI ARABIA Article 21 1 The court shall, during the moratorium period, approve the petition for enforcement against bankruptcy assets, or the assets of the guarantor of the debtor's debts offered as security if: a. enforcement does not affect the continuation of the debtor's business or obtaining the acceptance of creditors and owners of the proposal; or b. the rejection of such petition may cause substantial damage to the secured creditor rendering the debtor unable to compensate him therefor, and such damage outweighs any damage that may be sustained by the debtor and other creditors. 2 The court shall, during the moratorium period and in accordance with the Regulations, consider the petition of a creditor whose exact property is in the possession of the debtor. 3 Notwithstanding Article 18 of this Law, the court may, upon the petition of a person with interest, suspend the moratorium period for certain claims which were subject of a procedure prior to its commencement, if the court establishes that such action is in the interest of the debtor and the majority of creditors. Contracts Article 22 Without prejudice to the provisions of Chapter 14 of this Law, the registration of a petition for the initiation of a protective settlement procedure, or the initiation of such procedure shall not render future debts due, nor affect the maturity date of any payment under any contract. Any condition to the contrary shall be deemed null and void. Article 23 Without prejudice to the provisions of Chapter 14 of this Law, the registration of a petition for the initiation of a protective settlement procedure, or the initiation of such procedure shall not affect any contract to which the debtor is party. Any condition to the contrary shall be deemed null and void. Article 24 1 Contracts to which the debtor is party shall remain valid, regardless of the initiation of the protective settlement procedure. The debtor's counterparty shall be obliged to perform his contractual obligations after the initiation of such procedure, provided the debtor satisfies all the obligations arising after the initiation of the procedure. Any obligations of the debtor which he has not satisfied prior to the initiation of the procedure shall be included in the claims list. 2 If the debtor, after the initiation of the procedure, fails to satisfy his obligations under contracts to which he is party pursuant to paragraph (1) of this Article, the court may, upon the request of the counterparty, terminate the contract and discharge the counterparty from his contractual obligations without prejudice to his rights. 3 The debtor shall exercise due diligence to ensure satisfaction of his contractual obligations arising after the initiation of the procedure, including the immediate performance of such obligations or the provision of alternative guarantees for the counterparty's rights upon fulfillment of his obligations, as specified in the Regulations. 4 The debtor shall fulfill his obligations arising after the initiation of the procedure on their due dates, unless otherwise agreed with the counterparty. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه f@SaudiMCI www.mci.gov.sa 10 [Non-Text] وزاره التجاره Ministry of Commerce VISION 2x30 الخدمه العليا الديول KINGDOM OF SAUDI ARABIA Article 25 1 The court may, as specified in the Regulations and upon the request of the debtor during a hearing of which the counterparty is notified, terminate any contract to which the debtor is party if such termination is necessary to protect the debtor's business and is in the interest of the majority of creditors, provided that such termination does not result in substantial damage to the counterparty; the counterparty must be notified of the court's decision if he fails to attend the hearing. 2 Notwithstanding paragraph (1) of this Article, no security contracts, including pledge agreements, shall be terminated except in accordance with the provisions of this Law or relevant laws. Article 26 1 The provisions of Articles 22-25 of this Law shall not apply to government tenders and procurement contracts concluded between government agencies and the debtor. 2 The provisions of Articles 23-25 of this Law shall not apply to financing contracts concluded between banking or financing companies and the debtor. Voting on the Proposal Article 27 The proposal shall be voted on only by the creditor or the owner whose statutory or contractual rights will be affected by such proposal, as specified in the Regulations. Article 28 Subject to the provisions of Article 16 of this Law, if the proposal would affect owners' rights, the debtor must call upon them to vote thereon in accordance with relevant laws, provided that such vote precedes the creditors' vote. Article 29 In case of multiple creditors with debts or rights of different nature, the debtor must classify them in accordance with the Regulations. Article 30 1 If the claims of creditors are disputed, the debtor shall appoint a listed expert approved by the court to estimate the value of such claims which shall be included in the proposal to be voted on. 2 Subject to the court's approval, the proposal shall include claims of creditors not included in the proposal for reasons attributable to the debtor. Article 31 1 Creditors shall vote on the proposal in accordance with the procedures set forth therein and following the owners' vote of acceptance, if any, in accordance with Article 28 of this Law. 2 The proposal shall be deemed approved if all classes of creditors vote in its favor. A class of creditors shall be deemed to have accepted the proposal if the claims of creditors voting in favor of the proposal represent two-thirds of the value of debts owed to voters in the same class, and such voters include creditors whose claims represent more than half of the debts of non-related parties, if any. +966 11 294 4444 | Riyadh 11162 f@SaudiMCI 11 Kingdom of Saudi Arabia | المملكه العربيه السعوديه www.mci.gov.sa [Non-Text] وزاره التجاره Ministry of Commerce VISION d-96 230 دوكارد الدوكارد KINGDOM OF SAUDI ARABIA 3 The Regulations shall specify the provisions necessary for the management of the voting process referred to in paragraph (1) of this Article. 4 Upon completion of the voting process, the debtor shall immediately notify the creditors and owners of the voting result, and shall deposit the same with the court. 5 If the creditors fail to vote on the proposal at the date set by the court, the court shall take necessary action, including setting another voting date, or terminating the procedure. 6 The Regulations shall specify the manner for plan amendment. Petitioning the Court Confirmation of the Proposal Article 32 If creditors accept the proposal, the debtor shall file a petition with the court to confirm it and shall, prior to filing the petition, notify creditors accordingly. The court shall set a date for the confirmation hearing. Article 33 The initiation of a protective settlement procedure and the confirmation of the proposal shall not relieve the debtor of any obligation relating to his business under relevant laws. Confirmation of the Proposal Article 34 1 The court shall confirm the proposal upon verifying creditors' acceptance thereof and its compliance with standards of fairness. 2 A creditor shall have the right to object to the proposal before the court during the confirmation hearing on the grounds that it does not meet the standards of fairness if he votes against it, and if he reasonably believes that such proposal is prejudicial to his interests. Article 35 The proposal shall be deemed to have satisfied the standards of fairness if: a. the creditors' voting procedures are observed; b. the creditors have obtained sufficient information to review the proposal as well as the alternatives available to the debtor as compared to the items in the proposal; and c. the outstanding creditors' rights are observed, especially in respect of sharing losses, and the distribution of new rights, benefits, and securities. Notification and Deposit Article 36 Upon the court's confirmation of the proposal, the debtor shall immediately notify the creditors of such confirmation, and shall deposit a copy thereof in the Bankruptcy Register within a period not exceeding five days from the date of confirmation. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه f@SaudiMCI www.mci.gov.sa 12 [Non-Text] وزاره التجاره Ministry of Commerce VISION d—Jg 2×30 ال Estimates المطابق لاشدود KINGDOM OF SAUDI ARABIA Effects of the Court's Confirmation of the Proposal Article 37 The plan shall be binding upon the debtor, creditors, and owners, and the debtor shall complete the procedures stipulated in relevant laws. Termination of the Procedure Article 38 Upon completion of the implementation of the plan, the debtor shall file a petition with the court to render a decision terminating the protective settlement procedure, and shall attach therewith the information and documents specified in the Regulations. The debtor shall notify the creditors of such petition prior to filing. Any person with interest shall have the right to object to such petition before the court within 14 days from the date of filing the petition. Article 39 The court may terminate the protective settlement procedure if: a. the debtor files a petition with the court for the termination of the procedure due to the completion of the implementation of the plan; b. the quorum required for voting on the proposal by the owners or creditors is not met, or if it is not possible for the owners or creditors to vote on the proposal on the set date, without prejudice to Article 31(5) of this Law; c. the court refuses to confirm the proposal; d. the debtor files a petition for the termination of the procedure due to the fact that procedure initiation conditions are no longer applicable; e. the debtor or the creditor files a petition for the termination of the procedure due to inability to implement the plan; f. the debtor files a petition for the termination of the procedure due to his intention not to continue management of his business or implementation of the plan; or g. a person with interest files a petition for the termination of the procedure due to material breaches during the procedure, or due to the debtor's commission of any of the offenses stipulated in this Law. Article 40 The debtor shall deposit the court's decision to terminate the procedure in the Bankruptcy Register within a period not exceeding five days. Article 41 The court shall, on its own motion or upon the request of a person with interest, order the initiation of an appropriate bankruptcy procedure if : a. the debtor is distressed or bankrupt; b. the conditions for the initiation of the bankruptcy procedure are satisfied; and +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه f YouTube www.mci.gov.sa 13 [Non-Text] وزاره التجاره Ministry of Commerce VISION 2x30 الحديه العربيه السعوديه KINDOM OF SAUDI ARABIA c. the protective settlement procedure is terminated pursuant to Article 39(b)(c)(e)(f) or (g) of this Law. Chapter 4: Financial Restructuring Procedure Filing Petitions for the Initiation of the Procedure Article 42 1. Without prejudice to the provisions of relevant laws, the debtor, creditor, or the competent authority may file a petition with the court for the initiation of a financial restructuring procedure if the debtor is: a. likely to suffer financial difficulties that may lead to distress; b. distressed; or c. bankrupt. 2. A petition for the initiation of a financial restructuring procedure shall not be filed if the debtor has been subject to such procedure or to a small debtors' financial restructuring procedure during the 12 months preceding the petition. Article 43 The petition for the initiation of a financial restructuring procedure shall be registered with the court upon filing it along with the relevant information and documents, as specified in the Regulations. Article 44 If a person other than the debtor files a petition for the initiation of a financial restructuring procedure, the court shall notify the debtor thereof within a period not exceeding five days from the date of filing. The debtor may object to the petition before the court at the scheduled hearing if: a. the conditions for the initiation of the procedure are not satisfied; b. the debt is disputed; or c. the creditor seeks to abuse the procedure. The court may order the debtor to submit the information and documents specified in the Regulations. Article 45 The debtor, owner, manager, official, member of the board of directors, and auditor shall be exempted from the provisions of the Companies Law regarding company's losses amounting to a specific percentage under the Law, as specified in the Regulations. Moratorium Article 46 The registration of a petition for the initiation of a financial restructuring procedure or the initiation of such procedure shall result in a moratorium until the date on which the petition for initiation is rejected, or the proposal is confirmed by the court, or until the procedure is terminated prior to such date. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه f@SaudiMCI www.mci.gov.sa 14 [Non-Text] وزاره التجاره Ministry of Commerce VISION 2x30 الحديه العربيه السعوديه KINDOM OF SAUDI ARABIA Initiation of the Procedure Article 47 1 A financial restructuring procedure shall be initiated by virtue of a court order pursuant to Article 41 of this Law or paragraph (2) of this Article. 2 The court shall set a hearing date for considering the petition for the initiation of the procedure within 40 days from the date of filing, and notify the petitioner and debtor thereof within five days from the date of registering the petition. The court shall take any of the following decisions: a. Initiate the procedure if: I. the debtor is likely to remain in business, and the claims of creditors are likely to be settled within a reasonable time; II. the debtor is bankrupt, distressed, or is likely to suffer financial difficulties that may lead to distress; or III. the petitioner provides the information and documents referred to in Article 43 of this Law. b. Reject the petition if: I. the petition does not satisfy the statutory requirements, or is unjustifiably incomplete; or II. ii. the petitioner acts in bad faith, or commits any of the offenses stipulated in this Law. If the court rejects the petition, it may order the initiation of another suitable bankruptcy procedure. c. Postpone the hearing for a period not exceeding 21 days to provide any additional information or documents it requests. Such information and documents shall be submitted on the set date and prior to the date set for the postponed hearing. The court shall decide to either initiate the procedure or reject the petition in accordance with the provisions of this Article. 3 The court shall notify the debtor who fails to attend the hearing of its decision within five days from the date of its issuance. General Powers of the Court Article 48 The court may, on its own motion or upon the request of a person with interest, summon any person who has information or documents related to the petition for the initiation of a financial restructuring procedure to attend the hearing. The summoned person shall provide the court with the necessary information or documents within the period specified by the court. Article 49 1. The court may order that an asset be subjected to a financial restructuring procedure if the debtor jointly owns such asset with another person and it is not possible to divide said asset between them, without prejudice to the rights of the creditors of the debtor and the creditors of the co-owner of such asset. 2. The court may order that another person, on whom the conditions of the initiation of the procedure apply, be subjected to the procedure if it is in his interest and the interest of the debtor, and that applying separate procedures for each is costly or infeasible, provided the rights of the creditors of the debtor and the creditors of the other person are protected. +966 11 294 4444 | Riyadh 11162 f@SaudiMCI Kingdom of Saudi Arabia | المملكه العربيه السعوديه www.mci.gov.sa 15 [Non-Text] وزاره التجاره Ministry of Commerce VISION 2x30 ال Estimates المطروقات للسياحه KINDGOM OF SAUDI ARABIA Effects of the Initiation of the Procedure (Appointment and Powers of Trustee, Expert, and Overseeing Judge) Article 50 1. In its decision to initiate a financial restructuring procedure, the court shall appoint a listed trustee. The petitioner for the initiation of the procedure may propose to the court the name of the listed trustee to be appointed. 2. In the appointment of the trustee, his financial capabilities and academic qualifications, as well as the qualifications of his team shall be taken into consideration. 3. The trustee shall exercise due diligence vis-a-vis creditors' interests. 4. Without prejudice to paragraph (2) of this Article, the trustee may, upon the court's approval, delegate certain duties to a listed trustee or expert, when necessary, provided that such duties are clearly specified in the court's decision. 5. The court may, when necessary, appoint more than one trustee to jointly act in accordance with this Law and the court's instructions, provided the court appoints a chairman from among them. The trustees shall be jointly liable for their actions. The Regulations shall set forth their work procedures. 6. The trustee shall deposit a copy of the court's decision to initiate the procedure and of his appointment in the Bankruptcy Register. Article 51 The court may, upon the request of the trustee, appoint an expert from the list of experts or any other expert to assist the trustee in the discharge of his duties. Article 52 1. The following shall not be appointed as trustees or experts: a. The debtor's creditor, spouse, son-in-law, or relative up to the fourth degree. b. The debtor's partner, employee, auditor, or agent during the two years preceding the initiation of the procedure. 2. Prior to his appointment, the trustee or the expert shall disclose to the court his relationship with the debtor and creditors, and the trustee must disclose his relationship with the creditors upon submitting the statement of claims to the court. 3. If the trustee or the expert violates paragraph (2) of this Article, he shall be dismissed without the right to receive any fees. Article 53 The court, at its discretion, may appoint one or more judges to oversee the financial restructuring procedure and determine their duties. Article 54 1. The court may, on its own motion or upon the request of a person with interest, dismiss the trustee and appoint +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه f@SaudiMCI www.mci.gov.sa 16 [Non-Text] وزاره التجاره Ministry of Commerce VISION 2x30 ال Estimates الابعاد المطلوب KINDGOM OF SAUDI ARABIA a new listed trustee, or dismiss the expert and appoint a new expert from the list of experts or any other expert, if sufficient grounds for dismissal exist, without prejudice to his rights and obligations. 2. A trustee or expert shall not resign after his appointment without legitimate reasons acceptable to the court, without prejudice to his rights and obligations. Article 55 The Regulations shall specify the manner in which to determine the fees of the trustee and the expert, and any other related expenses. Publication of the Procedure Article 56 1. The trustee shall, within seven days from the date of his appointment, publish in any of the mediums specified in the Regulations the court's decision to initiate the financial restructuring procedure, and invite the creditors to submit their claims within a period not exceeding 90 days from the date of publication. 2. The trustee shall notify the creditors known to him of said court's decision in order to submit their claims within a period not exceeding 90 days from the date of notification. Procedure Oversight Article 57 The trustee shall oversee the debtor's business during the financial restructuring procedure period to verify fairness of the procedure, and implement the plan in such a manner as to ensure speedy performance and the provision of necessary protection to the interests of those affected by the procedure, in accordance with this Law. Article 58 1. During the period of the financial restructuring procedure, in addition to other duties and powers vested in him under this Law and its Regulations, the trustee shall: a. verify the soundness of the debtor's management of his business, and monitor his financial operations; b. attend litigation hearings, creditors' meetings, and other meetings relating to the debtor and the procedure; c. perform any task ancillary or incidental to his duties and powers; d. perform tasks entrusted to him by the court; and e. perform any other task specified by the Regulations. 2. In the performance of his duties and the exercise of his powers, the trustee must act with integrity and honesty. Article 59 1. The trustee may access and obtain information or documents held by the court relating to the debtor. The debtor shall provide the trustee with any additional information or documents and any updates upon becoming aware thereof, and shall disclose to him the amounts he owes to third parties that were not previously disclosed to the court, as well as any contracts, lawsuits, or judicial proceedings to which he is party. 2. The trustee shall have the right to obtain and maintain information and documents relating to bankruptcy assets, +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه f@SaudiMCI www.mci.gov.sa 17 [Non-Text] وزاره التجاره Ministry of Commerce VISION 2x30 ال Estimates الابريز للشجع KINDOM OF SAUDI ARABIA licenses pertaining to the debtor's business, and any other information or documents relevant to the debtor's business. 3. The trustee may request the creditor to provide additional information or documents to support his claim, or amend the amount or nature of the debt. 4. The trustee shall have the right to obtain any information relating to the debtor's business or bankruptcy assets from public and private entities to the extent necessary to enable him to perform his duties, including documents and the debtor's bank and investment account statements. Any person in possession of such information shall disclose the same. 5. Disclosure to the trustee of the information referred to in paragraph (4) of this Article shall not be deemed a breach of information confidentiality. The trustee shall maintain such information and documents, and protect their confidentiality. Contracts Article 60 1. The debtor shall provide the trustee, upon his appointment, with a detailed list of valid contracts and any data relevant thereto, along with copies of said contracts and a statement identifying contracts to remain valid or to be terminated along with the grounds therefor. 2. The trustee may request the debtor to provide him with information or documents relating to the contracts referred to in paragraph (1) of this Article, and the debtor must submit the same within a reasonable time determined by the trustee. 3. The trustee shall carefully examine the list of contracts, information, and documents submitted to him under paragraphs (1) and (2) of this Article. Article 61 1. The trustee may, upon examination of the debtor's list of contracts as well as relevant information and documents submitted to him, issue a decision within 60 days from the date of initiation of the financial restructuring procedure for the termination of any contract concluded by the debtor, if such termination is necessary to implement the confirmed proposal and to protect the interests of the majority of creditors, and does not cause substantial damage to the debtor's counterparty, even if the contract provides otherwise. Such termination shall be pursuant to a written notification to the counterparty. The contract shall be deemed terminated upon the lapse of 30 days from the date of notification, unless the trustee and the counterparty agree on a shorter period. The trustee may request the court to extend the period during which he is entitled to decide on the termination of any contract for a period not exceeding 30 days, provided this is necessary in view of the volume and nature of the debtor's business. 2. Notwithstanding paragraph (1) of this Article, the trustee may, upon examining the debtor's list of contracts and relevant information and documents, issue a decision terminating any lease contract for properties where the debtor conducts his business within 60 days from the procedure initiation date if such termination is necessary to implement the confirmed proposal and protect the interests of the majority of creditors, even if the contract provides otherwise. The trustee must notify the debtor's counterparty of his decision in writing. The contract shall be deemed terminated upon the lapse of 90 days from the date of notification, unless the contract provides for a shorter period. The trustee may request the court to extend the period during which he is entitled to decide on the termination of any contract for a period not exceeding 30 days, provided this is necessary in view of the number of properties where the debtor conducts his business. +966 11 294 4444 | Riyadh 11162 f@SaudiMCI 18 Kingdom of Saudi Arabia | المملكه العربيه السعوديه www.mci.gov.sa [Non-Text] وزاره التجاره Ministry of Commerce VISION dJg 230 دوله عربيه للشعر KINGDOM OF SAUDI ARABIA 3. The trustee's termination of any contract between the debtor and the counterparty under paragraphs (1) or (2) of this Article, shall not prejudice the rights of such counterparty including the right to make a claim to the trustee for any damage incurred as a result of such termination, for purposes of voting on the proposal. 4. If the debtor's counterparty objects to the trustee's decision to terminate his contract, the court shall consider such objection in accordance with the provisions of Article 62 of this Law. 5. If the trustee decides not to terminate any contract in accordance with paragraphs (1) and (2) of this Article, the debtor shall be obligated to fulfill the terms of the contract, unless amended or affected by the plan. 6. The trustee may sublease to a third party the property rented by the debtor or part thereof, even if the contract provides otherwise. The debtor must guarantee preservation of the property and payment of the lease in accordance with the terms of the contract. 7. Contracts relating to government tenders and procurement concluded between a government agency and the debtor shall not be subject to the provisions of this Article, as well as Articles 22, 23, 24, and 60 of this Law. 8. Financing contracts concluded between banking or financing companies and the debtor shall not be subject to the provisions of this Article, as well as Articles 23, 24, and 60 of this Law. Article 62 The court shall consider the objection filed by the counterparty, in accordance with Article 61(4) of this Law, and shall accept the objection if it is established that: a. the termination of the contract, pursuant to Article 61(1) of this Law, is not necessary for the implementation of the plan or the protection of the interests of the majority of creditors, and it causes substantial damage to the counterparty; b. the termination of the contract, pursuant to Article 61(2) of this Law, is not necessary for the implementation of the plan or the protection of the interests of the majority of creditors. Submission of Claims Article 63 1. Any creditor whose debt is established prior to the court's decision to initiate the financial restructuring procedure shall submit to the trustee within the period specified in Article 56 of this Law any due, future, conditionally suspended, or potential claims, or other claims that may have current or future financial value. The creditor shall attach to his claim the documents and information provided for in the Regulations, a statement of the value of his claim on the date of the court's decision for the initiation of the procedure, the debt not yet due and its maturity date, and any other document supporting his claim. The creditor must also state if his claim is secured and the type of securities presented. 2. If the value of the claim is not precisely stated, the creditor shall submit the claim with an estimated value, and the trustee shall verify the actual value thereof. Non-Submission of Claims Article 64 Any creditor who fails to submit his claim within the period specified in Article 56 of this Law shall be excluded from voting on the proposal, unless he proves to the court prior to voting that: +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه f@SaudiMCI www.mci.gov.sa 19 [Non-Text] وزاره التجاره Ministry of Commerce VISION 2x30 الحديه المطره السعوديه KINGDOM OF SAUDI ARABIA a. he submitted his claim, but such claim did not reach the trustee for reasons beyond his control; b. the debtor omitted his claim from the list submitted to the trustee; or c. the trustee omitted his claim from the list filed with the court. Inventory of Debtor's Bankruptcy Assets Article 65 The trustee shall prepare a detailed inventory of bankruptcy assets, including details of such assets, any securities associated therewith, assets in possession of the debtor, assets subject to third-party claims, and other pertinent information. The trustee must provide the court with a copy of said inventory. Article 66 A natural person debtor may retain out of the bankruptcy assets what is required to provide him and his dependents with a decent standard of living. The court shall determine the amount based on the trustee's recommendation. The debtor shall assist the trustee in determining the value of his assets to determine those that may be retained by the debtor. Assets retained for such purpose shall not be included in the proposal. Third-Party Assets Article 67 Any third party whose assets are in the possession of the debtor or attached thereby shall provide the trustee with detailed information relating thereto, and shall file a petition with the court to recover such assets attached with supporting documents. The trustee may provide the court with his opinion on such petition. List of Claims of Creditors Article 68 1. The trustee shall, as specified in the Regulations, prepare a list of claims of creditors on the basis of information submitted to him, and shall submit such list with the court for approval within 14 days from the date of expiration of the period set for submission of claims. The list must include the following: a. The address and claim amount of each creditor. b. Identification of secured creditors, details of securities held thereby, and the estimated value of assets subject of such securities. c. Debts that may be set off. d. The trustee's recommendation regarding each submitted claim whether to accept, reject, or refer such claim to an expert. e. Stipulations of the Regulations. 2. The trustee must, within five days from the date of filing the list of claims with the court, notify the creditor of the recommendation to reject or refer his claim to an expert. Said creditor may petition the court to consider his claim. If the court decides to accept such claim or part thereof, it shall include it in the list of claims for voting purposes. 3. The court may, if necessary and upon the request of the trustee, extend the deadline for submitting the list of +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه f@SaudiMCI www.mci.gov.sa 20 [Non-Text] وزاره التجاره Ministry of Commerce VISION 2010 2×30 الحديه العربيه السعوديه KINGDOM OF SAUDI ARABIA claims referred to in paragraph (1) of this Article. 4. The creditor may access the list of claims approved by the court. Article 69 1. Without prejudice to the trustee's powers and duties, the debtor shall continue to manage his business and activities during the period of the financial restructuring procedure under the trustee's supervision. 2. If, during the procedure, the debtor or any of his officials fails to cooperate with the trustee or commits any act of negligence, mismanagement, or any offense stipulated in this Law, the trustee may request the court to suspend the debtor's management of his business, provided the trustee provides the court with his opinion and that of the creditors' committee, if any, regarding the continuation of the procedure. Accordingly, the court may decide to: a. assign the trustee instead of the debtor to manage the business, and transfer all the debtor's powers and responsibilities to the trustee during the validity of the procedure. The trustee may seek the assistance of any person he deems appropriate in the management of the debtor's business; b. appoint another person to replace the debtor in managing the business if the volume or type of the business so requires, and transfer all the debtor's powers and responsibilities to such person during the validity of the procedure, provided the appointee fulfills the debtor's obligations towards the trustee. If the appointee is a legal person, it must appoint a natural person as its representative; c. terminate the procedure and initiate the debtor's liquidation procedure, if it deems it necessary; or d. decide on any other procedure stipulated in the Regulations. 3. If the debtor submits a signed request to the trustee declaring his decision to discontinue the management of his business during the procedure for personal reasons, the trustee may submit a request to the court in accordance with paragraph (2) of this Article. Protection of Business Article 70 1. Without prejudice to relevant laws, the debtor must obtain the trustee's written approval, during the period from the initiation of the financial restructuring procedure to the confirmation of the proposal, for any of the following acts: a. Preparing the proposal and implementing its procedures, including inviting creditors to vote thereon. b. Applying for financing. c. Paying due or outstanding debts. d. Concluding a new insurance contract that entails substantial obligations. e. Vacating any of the leased bankruptcy assets, and concluding any lease contract necessary or beneficial for his business. f. Concluding any agreement or settlement with one or more creditors. g. Providing or renewing any security for a third party. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه f@SaudiMCI www.mci.gov.sa 21 [Non-Text] وزاره التجاره Ministry of Commerce VISION 23:30 ال Estimates المطلوب KINGDOM OF SAUDI ARABIA h. Changing any of the debtor's registered premises or offices. i. Voting on a proposal of a debtor's debtor under any of the bankruptcy procedures entailing waiving any of the debtor's rights. j. Concluding a contract for obtaining legal, accounting, or other consultancy services to assist him in the financial restructuring of his business. k. Filing lawsuits or litigating in any proceeding before judicial, quasi-judicial, or arbitration bodies. 1. Appointing an agent to act on his behalf, except if such appointment falls within the scope of the debtor's normal course of business. m. Establishing a subsidiary, or purchasing shares in another company. n. Transferring ownership of all or some of his business or assets beyond the normal course of his business. o. Requesting the termination of the procedure in accordance with Article 87(a) or (f) of this Law. p. Undertaking any action stipulated in the Regulations. 2. The debtor's compliance with paragraph (1) of this Article shall not relieve him from any obligations stipulated in this Law and relevant laws. 3. The trustee shall exercise due diligence in the exercise of his powers and duties, and shall not be held liable to third parties for any loss or damage resulting from his approval of any of the debtor's actions provided for in paragraph (1) of this Article. Prohibition on the Disposition of Assets Article 71 If the debtor disposes of any of the bankruptcy assets beyond the scope of his normal course of business in violation of the provisions of Article 70(1)(n) of this Law, the court may decide, upon the request of a person with interest, to nullify his action and recover assets, or take any other appropriate action, without prejudice to the rights of bona fide third parties. An aggrieved party may file a claim for compensation. Article 72 Without prejudice to the rights of secured creditors, the trustee may, during the period from the initiation of the financial restructuring procedure to the confirmation of the proposal, petition the court to approve the replacement of the security submitted to the debtor's creditor with another equivalent security if such action is in the interest of the majority of creditors. Formation of Creditors' Committee Article 73 A creditors' committee shall be formed in the cases specified by the Regulations. The Regulations shall specify the duties and work procedures of the committee. Article 74 In case of multiple creditors with debts or rights of different nature, the debtor must classify them as specified in the Regulations. +966 11 294 4444 | Riyadh 11162 Kingdom of Saudi Arabia | المملكه العربيه السعوديه f@SaudiMCI www.mci.gov.sa 22 [Non-Text] وزاره التجاره Ministry of Commerce VISION 2x30 ال Estimates الابعه السعوديه KINDOM OF SAUDI ARABIA Financial Restructuring Proposal Article 75 1. The debtor shall, with the assistance of the trustee, prepare the proposal within the period set by the court in its decision to initiate the financial restructuring procedure. 2. The proposal must include a description of the debtor's financial position and the effect of the economic conditions thereon, as well as information and documents specified in the Regulations. 3. The trustee shal …(103,333 more chars)