Article 24 of the Saudi Implementing Regulations of the Bankruptcy Law
المادة 24 من اللائحة التنفيذية لنظام الإفلاس · الفصل الثاني: أحكام مشتركة بين إجراءات الإفلاس: طلب افتتاح إجراء الإفلاس
A creditors' committee is formed by court decision with at least 3 members; the article sets out who may request it, the nomination periods and conditions, and the procedure and effect of the formation decision.
Official text (Arabic)
This article has not been amended since the law was issued.
1 - يكون تشكيل لجنة الدائنين من (ثلاثة) أعضاء على الأقل من الدائنين بقرار من المحكمة من تلقاء نفسها أو بناءً على طلب الأمين أو طلب دائنين تمثل مطالباتهم ( 50 % ) من إجمالي قيمة الديون، وذلك في الأحوال التي ترى المحكمة مناسبة تشكيل اللجنة فيها.
2- إذا رأت المحكمة تشكيل لجنة للدائنين فتبلغ الأمين بذلك، وعلى الأمين خلال (خمسة) أيام من تاريخ تبليغه أن يبلغ الدائنين للترشح. وعلى الدائن الذي يرغب في الترشح تقديم طلبه إلى الأمين خلال (أربعة عشر) يوماً من تاريخ التبليغ.
3- يشترط لترشح الدائن لعضوية لجنة الدائنين الآتي:
أ - أن تكون له مطالبة مقبولة في قائمة المطالبات.
ب - ألا يكون دينه محل المطالبة مضموناً بكامله.
4- يودع الأمين قائمة المرشحين لدى المحكمة مرافقاً لها التشكيل المقترح ومسوغاته، على أن يراعي في اقتراحه التمثيل العادل للدائنين. وتصدر المحكمة قرارها بتشكيل لجنة الدائنين وتسمية أحد أعضائها رئيساً، ويودع الأمين نسخة من قرار المحكمة في سجل الإفلاس، ويسري القرار من تاريخ إيداعه في السجل.
This is the official Arabic wording, the only legally binding version. We do not translate the law itself; the explanation below is ours. Official source: Bureau of Experts at the Council of Ministers
Article 24 explained in plain English
This article of the Implementing Regulations of the Bankruptcy Law regulates the formation of the creditors' committee step by step.
1- Formation and who requests it: The committee consists of at least 3 members from among the creditors, by a decision of the court on its own initiative, at the request of the trustee, or at the request of creditors whose claims represent 50% of the total value of the debts. This applies in cases where the court considers it appropriate to form the committee.
2- Nomination: If the court decides to form the committee, it notifies the trustee, and within 5 days of being notified the trustee must notify the creditors so that they can apply. A creditor who wishes to be a candidate submits his application to the trustee within 14 days of the date of notification.
3- Conditions of nomination:
- The creditor has an accepted claim in the list of claims.
- His debt that is the subject of the claim is not fully secured.
A creditor whose debt is fully secured does not meet the second condition.
4- Formation decision: The trustee files the list of candidates with the court, accompanied by the proposed formation and its grounds, taking into account fair representation of the creditors. The court then issues its decision forming the committee and naming one of its members as chair. The trustee files a copy of the decision in the Bankruptcy Register, and the decision takes effect from the date it is filed in the Register.
Relation to neighboring articles: Article 25 sets out the cases in which membership ends, including the opening of a bankruptcy procedure for the member, absence from 3 consecutive meetings without an excuse accepted by the committee chair, no longer being a creditor, and the member's own request to end his membership. Article 23 regulates the removal and withdrawal of the trustee.
Anyone who wishes to be a candidate and needs to check that he meets the conditions is advised to consult a lawyer who specializes in bankruptcy cases.
Practical example
A liquidation procedure was opened for a contracting company in Riyadh, and creditors whose claims represent 50% of the total value of the debts asked for a creditors' committee to be formed, which the court considered appropriate. The trustee notified the creditors so they could apply, within 5 days of being notified. A steel supplier with an accepted unsecured claim submitted its application within 14 days, while a bank whose debt is fully secured by a mortgage does not meet the condition for nomination.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
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Frequently asked questions about Article 24 of the Saudi Implementing Regulations of the Bankruptcy Law
How is the creditors' committee formed?
By a court decision, on its own initiative or at the request of the trustee or of creditors whose claims represent 50% of the total debts, in cases the court considers appropriate, with at least 3 members.
Who may be a candidate for the creditors' committee?
A creditor who has an accepted claim in the list of claims and whose debt that is the subject of the claim is not fully secured.
How long is the period to apply for the creditors' committee?
The creditor submits his application to the trustee within 14 days of the date he is notified of the nomination.
When does the decision forming the creditors' committee take effect?
From the date the trustee files a copy of the decision in the Bankruptcy Register.
More articles on Creditors' Committee
- Article 15
The meeting management rules apply to any meeting of creditors or the creditors' committee held under the Bankruptcy Law or its Regulations, unless otherwise agreed.
تطبق قواعد إدارة الاجتماعات على أي اجتماع -للدائنين أو لجنة الدائنين- يُعقد بموجب أحكام النظام أو اللائحة، ما لم يتفق على غير ذلك.
- Article 25
This article sets out four cases in which a creditors' committee member's membership ends, and requires the trustee to notify the court, which may appoint a replacement.
1- تنتهي عضوية عضو لجنة الدائنين في الحالات الآتية: أ- إذا حكمت المحكمة بافتتاح إجراء إفلاس للعضو. ب- إذا تغيب عن (ثلاثة) اجتماعات متتالية دون عذر يقبله رئيس ال
- Article 26
This article sets out the creditors' committee's tasks in representing the creditors, including approving the sale of any asset worth more than a quarter of the bankruptcy estate's assets, and lets its chair set the time and place of meetings.
1- تلتزم لجنة الدائنين بتمثيل الدائنين في المهمات المنصوص عليها في النظام واللائحة، وتشمل مهماتها الآتي: أ - الموافقة على بيع أي أصل تتجاوز قيمته ربع قيمة أصول
- Article 27
The chair runs the creditors' committee's meetings, a meeting is valid only if a majority of members attend, decisions pass by a majority of those present, and meetings may be held by modern technology with minutes recorded.
1 - يدير رئيس لجنة الدائنين اجتماعاتها، وله عند غيابه أن يفوض -كتابة- أحد أعضائها بذلك. 2 - لا يكون اجتماع لجنة الدائنين صحيحاً إلا إذا حضره أغلبية الأعضاء على
- Article 28
Any reasonable expenses a creditors' committee member incurs to attend the committee's meetings are paid from the bankruptcy estate's assets.
تدفع من أصول التفليسة أي مصروفات معقولة تكبدها عضو لجنة الدائنين لحضور اجتماعات اللجنة.
- Article 29
Membership of the creditors' committee does not stop a member from dealing with the debtor, as long as the dealing is in good faith and at fair value.
لا يترتب على عضوية لجنة الدائنين حظر تعامل العضو مع المدين, متى كان هذا التعامل بحسن نية وبقيمة عادلة.
The texts are reproduced from the official website of the Bureau of Experts at the Council of Ministers for reference; where they differ, the officially published Arabic text prevails. This content is not legal advice.