Article 73 of the Saudi Implementing Regulations of the Bankruptcy Law
المادة 73 من اللائحة التنفيذية لنظام الإفلاس · الفصل العاشر: المقاصة والديون التبادلية
Automatic set-off based on a debt assignment that arose after the application to open any of the liquidation procedures was submitted is not permitted.
Official text (Arabic)
This article has not been amended since the law was issued.
لا يجوز إجراء المقاصة التلقائية بناء على حوالة دين نشأت بعد تقديم طلب افتتاح أي من إجراءات التصفية.
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 73 explained in plain English
This article opens the chapter on set-off and mutual debts in the Regulations, and sets a clear restriction: automatic set-off may not be carried out if it is based on a debt assignment that arose after the application to open any of the liquidation procedures was submitted.
To understand the article, it helps to explain two terms in simple language:
- Set-off: Where two persons owe each other, each cancels his debt to the extent of the other's debt instead of each paying the other.
- Debt assignment: The transfer of a debt from one person to another.
The elements of the prohibition as they appear in the text:
- The set-off is automatic.
- It is based on a debt assignment.
- The assignment arose after the application to open any of the liquidation procedures was submitted; what counts is the date the application was submitted.
The evident purpose is to prevent a person from acquiring a debt of the debtor after the liquidation application in order to get rid of a debt he owes the debtor, thereby getting ahead of the other creditors.
It is followed by Article 74, which refers the rules on multilateral set-off between regulated entities that carry on a financial activity to the competent authority. This article does not address other cases of set-off or assignments that preceded the liquidation application. Anyone facing a particular situation should consult a lawyer who specializes in bankruptcy and commercial cases.
Practical example
A supply company in Jeddah owes SAR 50,000 to an establishment for which an application to open liquidation has been submitted. After the application was submitted, the supply company bought from another supplier a debt it holds against the establishment for the same amount, and wanted to cancel what it owes by automatic set-off. This article prevents that because the assignment arose after the liquidation application was submitted.
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 73 of the Saudi Implementing Regulations of the Bankruptcy Law
Is automatic set-off permitted based on a debt assignment after a liquidation application?
No. The article prohibits automatic set-off based on a debt assignment that arose after the application to open any of the liquidation procedures was submitted.
What date is relevant for applying the prohibition?
The date the application to open the liquidation procedure was submitted; the prohibition covers an assignment that arose after it.
Does the article apply to procedures other than liquidation?
The text speaks of an application to open any of the liquidation procedures.
More articles on Set-Off and Priority of Debts
- Article 54
This article specifies what the decision to distribute to creditors in liquidation must contain, and allows the trustee to ask the court to amend it.
1 - يجب أن يتضمن قرار التوزيع على الدائنين الآتي: أ - بيان أصول التفليسة المبيعة وحصيلة بيعها. ب - بيان طريقة توزيع حصيلة بيع أصول التفليسة وتاريخ التوزيع. ج -
- Article 71
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.
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 الإ
- Article 74
This article makes the competent authority responsible for issuing the rules on multilateral set-off between regulated entities that carry on a financial activity.
تصدر الجهة المختصة القواعد المنظمة لإجراء عمليات المقاصة المتعددة الأطراف بين الكيانات المنظمة التي تمارس نشاطاً ماليًّا.
- Article 75
Automatic set-off takes place according to the exchange rates at the Saudi Central Bank on the date the procedure opens.
تجرى المقاصة التلقائية وفقاً لأسعار الصرف لدى مؤسسة النقد العربي السعودي في تاريخ افتتاح الإجراء.
- Article 76
This article makes the order of debts within each priority listed in Article 196 of the Bankruptcy Law follow their order in the relevant laws.
يكون ترتيب أولوية الديون في كل من الأولويات الواردة في المادة (السادسة والتسعين بعد المائة) من النظام وفق ترتيبها في الأنظمة ذات العلاقة.
- Article 77
Debts of the debtor necessary for continuing its activity that arise after the bankruptcy procedure opens are counted as expenses during the procedure and paid according to paragraph (e) of Article 196 of the Law.
تعد ديون المدين اللازمة لاستمرار نشاطه -التي تنشأ بعد افتتاح إجراء الإفلاس- ضمن المصروفات أثناء الإجراء، وتكون أولوية سدادها وفقاً لحكم الفقرة (هــ) من المادة (
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.