Article 29 of the Saudi Implementing Regulations of the Bankruptcy Law
المادة 29 من اللائحة التنفيذية لنظام الإفلاس · الفصل الثاني: أحكام مشتركة بين إجراءات الإفلاس: طلب افتتاح إجراء الإفلاس
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.
Official text (Arabic)
This article has not been amended since the law was issued.
لا يترتب على عضوية لجنة الدائنين حظر تعامل العضو مع المدين, متى كان هذا التعامل بحسن نية وبقيمة عادلة.
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 29 explained in plain English
This article of the Implementing Regulations of the Bankruptcy Law answers a practical question: is a creditors' committee member barred from dealing with the debtor?
The rule: Membership of the creditors' committee does not result in a ban on the member dealing with the debtor. A creditor who becomes a committee member, for example as a supplier or customer of the debtor, is not barred from dealing with it by membership alone.
The two limits: This rule is subject to two things together, according to the article's wording "as long as the dealing is in good faith and at fair value":
- The dealing must be in good faith.
- The dealing must be at fair value.
The text ties the absence of a ban to both being met. The article does not say what follows from a dealing that lacks one of them, or how fair value is assessed.
Relation to neighboring articles:
- Article 28 provides that any reasonable expenses a committee member incurs to attend its meetings are paid from the bankruptcy estate's assets.
- Article 30 regulates the request of a creditor who finds the very property it owns with the debtor during the period of the stay of claims.
Practical advice: A committee member who deals with the debtor is advised to document the terms and prices of the dealing, because the text ties the permissibility of dealing to good faith and fair value. A member who wants to conclude a transaction with the debtor is advised to consult a lawyer who specializes in bankruptcy and commercial cases.
Practical example
A food supply company in Jeddah is a member of the creditors' committee of a restaurant chain subject to a bankruptcy procedure. The company may continue supplying goods to the restaurants, as long as the dealing is in good faith and at fair value.
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 29 of the Saudi Implementing Regulations of the Bankruptcy Law
May a creditors' committee member deal with the debtor?
Yes. Membership does not result in a ban on dealing with the debtor, as long as the dealing is in good faith and at fair value.
What are the conditions for a creditors' committee member to deal with the debtor?
The dealing must be in good faith, and it must be at fair value.
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 24
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.
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 %
- 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.
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.