Ministry of Commerce and Investment: The Bankruptcy Law Provides Better Solutions to Financially Distressed Companies

Majed Alrasheed, the head of the Bankruptcy Commission in the Ministry of Commerce and Investment stated that “the Bankruptcy Law, once applied after Eid Al-Adha holiday, will contribute to solving bankruptcy and financial distress situations that companies face.” He add that “without doubt, there are companies that are not going through their best days, due to different challenges, and they need to benefit from the new Bankruptcy Law. We look forward to this Law that presents better solutions to these companies once implemented.”

On the margins of a meeting organized by the Eastern Province Chamber of Commerce yesterday, Alrasheed clarified to Al Eqtisadiah that the Law will improve local and international investors’ confidence in the economy. It will also achieve a balanced framework to resolve bankruptcy issues in Saudi Arabia in accordance with international standards. He also noted that the Law will upgrade the Kingdom’s ranking in international indexes, particularly in financial distressed reports so that the Kingdom will be ranked 168 out of 190 countries on the international level. He predicts that officially implementing the Law will introduce drastic changes in Saudi Arabia’s ranking in this regard.

Alrasheed also clarified that the upcoming 7th of Thul-Hijja will be the first day the Law, which was established after careful revision, takes place. Alrasheed stressed the fact that the Implementi​ng Regulations have also been prepared subject to approval. from the Bureau of Experts, that is currently examining it.

Alrasheed noted that the Commission’s website contains uploaded cases and contains details that are constantly updated. The website aims to identify all cases on both domestic and international level in order to improve transparency.  “One of the objectives of the Law,” Alrasheed states, “is to allow the debtor to restructure his or her financial situation while protecting the rights of creditors. The Law is here to balance between the two and provide the best solution to different enterprises in so that it would limit exit from the market - due to financial difficulties. The Law also provides tools and solutions that protect and organizes the value of assists so that they are sold at maximum value in a short period of time. This will in turn regains confidence in the market.

Alrasheed clarified that the new Law contains 230 Articles in 17 Sections. The Law is also in line with both up-to-date international practices and Islamic law.​