Article 77 of the Saudi Implementing Regulations of the Bankruptcy Law
المادة 77 من اللائحة التنفيذية لنظام الإفلاس · الفصل الحادي عشر: أولوية الديون
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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 (السادسة والتسعين بعد المائة) من النظام.
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 77 explained in plain English
This article of the Regulations deals with the position of new debts the debtor takes on after the bankruptcy procedure opens.
The conditions for applying it as they appear in the text:
- The debts must be necessary for continuing the debtor's activity.
- They must have arisen after the bankruptcy procedure opened.
If both conditions are met:
- These debts are counted among the expenses during the procedure, not among the debts that preceded the procedure.
- The priority of paying them is according to the ruling of paragraph (e) of Article 196 of the Bankruptcy Law.
The practical importance is that someone who deals with the debtor after the procedure opens to enable it to carry on its activity, such as a supplier or service provider, has its debt treated as expenses during the procedure, and paragraph (e) of Article 196 determines its place in payment. This article does not state the content of that paragraph, which should be consulted in the Law.
The article comes after Article 76, which makes the order of debts within each priority of Article 196 follow the relevant laws, and before Article 78, which orders the payment of dues before ending preventive settlement and financial reorganization and their small-debtor equivalents.
Anyone who deals with a debtor in a bankruptcy procedure and wants to assess the position of his debt is best advised to consult a lawyer who specializes in bankruptcy and commercial cases.
Practical example
A bankruptcy procedure was opened for a small factory in Riyadh, and the factory continued to operate. After the opening it bought raw materials from a supplier to continue production. The supplier's debt here arose after the opening and is necessary for continuing the activity, so it is counted among the expenses during the procedure, and its priority of payment is according to paragraph (e) of Article 196 of the Law.
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 77 of the Saudi Implementing Regulations of the Bankruptcy Law
What is the ruling on debts the debtor takes on after bankruptcy opens to continue its activity?
They are counted among the expenses during the procedure, and their priority of payment is according to paragraph (e) of Article 196 of the Law.
Does the article cover every new debt after the opening?
The text requires that the debt be necessary for continuing the debtor's activity and that it arise after the procedure opens.
Does the article state the exact order of these debts?
No. It refers to paragraph (e) of Article 196 of the Bankruptcy Law.
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 73
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.
لا يجوز إجراء المقاصة التلقائية بناء على حوالة دين نشأت بعد تقديم طلب افتتاح أي من إجراءات التصفية.
- 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.
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.