Article 71 of the Saudi Implementing Regulations of the Bankruptcy Law
المادة 71 من اللائحة التنفيذية لنظام الإفلاس · الفصل التاسع: إجراء التصفية الإدارية
If selling the bankruptcy estate's assets yields proceeds sufficient for the expenses of liquidation or small debtors' liquidation, they are distributed starting with the Bankruptcy Committee's fees and expenses, then to the creditors.
Official text (Arabic)
This article has not been amended since the law was issued.
إذا نتجت عن بيع أصول التفليسة حصيلة تكفي للوفاء بمصروفات إجراء التصفية أو التصفية لصغار المدينين، فيكون توزيعها وفقاً للترتيب الآتي:
أ - أتعاب ومصروفات لجنة الإفلاس.
ب - التوزيع على الدائنين وفقاً لأحكام التوزيع المنصوص عليها في النظام واللائحة.
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 71 explained in plain English
This article of the Regulations, in the chapter on administrative liquidation, sets the order of distributing the proceeds resulting from selling the bankruptcy estate's assets.
Condition for applying it: That the sale produces proceeds sufficient to meet the expenses of the liquidation procedure or the small debtors' liquidation. If that is met, the distribution is as follows:
- First: The Bankruptcy Committee's fees and expenses.
- Second: Distribution to the creditors in accordance with the distribution provisions set out in the Bankruptcy Law and the Regulations.
This means that the creditors receive nothing from the proceeds before the Bankruptcy Committee's fees and expenses are paid. As for how the distribution is made among the creditors themselves and the order of their priorities, this article did not detail it but referred to the distribution provisions set out in the Law and the Regulations.
This article is related to Article 70, which explains when the proceeds of sale are not worthwhile, and to Article 72, which deals with filing the decision ending administrative liquidation.
This article does not address the case where the proceeds are insufficient for the expenses. A creditor who wants to know his place in the distribution is best advised to consult a lawyer who specializes in bankruptcy and commercial cases.
Practical example
The assets of a small establishment in Tabuk were sold for an amount sufficient for the expenses of the liquidation procedure. The Bankruptcy Committee's fees and expenses are paid first, then the remainder is distributed to the creditors, such as suppliers and financiers, in accordance with the distribution provisions in the Law and the Regulations.
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 71 of the Saudi Implementing Regulations of the Bankruptcy Law
Who is paid first from the proceeds of selling bankruptcy estate assets in administrative liquidation?
The Bankruptcy Committee's fees and expenses, then distribution to the creditors follows.
How is money distributed among the creditors?
In accordance with the distribution provisions set out in the Bankruptcy Law and the Regulations, which this article does not detail.
When does this order apply?
If selling the assets produces proceeds sufficient to meet the expenses of the liquidation procedure or the small debtors' liquidation.
More articles on Administrative Liquidation
- Article 68
This article allows the Bankruptcy Committee to use whomever it sees fit to carry out the work of the administrative liquidation procedure.
للجنة الإفلاس الاستعانة بمن تراه في أداء أعمال إجراء التصفية الإدارية.
- Article 69
This article requires the Bankruptcy Committee, in administrative liquidation, to prepare an inventory list of the bankruptcy estate's assets that includes their estimated value.
تعد لجنة الإفلاس قائمة جرد بأصول التفليسة، على أن تتضمن القيمة التقديرية لتلك الأصول.
- Article 70
This article identifies two cases in which the proceeds of selling bankruptcy estate assets are not worthwhile: the estimated cost of sale equals or exceeds the asset's value, or the sale cannot be made within a reasonable time.
تكون حصيلة بيع أصول التفليسة غير مجدية في الحالات الآتية: أ - إذا كانت التكلفة المقدرة لبيع الأصل تساوي أو تزيد على القيمة المقدرة لبيعه. ب - إذا تعذر بيع الأصل
- Article 72
This article requires the Bankruptcy Committee to file the decision ending administrative liquidation with the court and to file proof of the ending in the Bankruptcy Register and the Commercial Register within 5 days, and limits removing the debtor's name to a natural person.
1- تودع لجنة الإفلاس لدى المحكمة قرار إنهاء إجراء التصفية الإدارية مرافقاً له المعلومات والوثائق المحددة لذلك، وتودع لدى سجل الإفلاس والسجل التجاري ما يفيد بإنه
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.