Article 78 of the Saudi Implementing Regulations of the Bankruptcy Law
المادة 78 من اللائحة التنفيذية لنظام الإفلاس · الفصل الحادي عشر: أولوية الديون
This article orders the payment of dues before ending preventive settlement and financial reorganization and their small-debtor equivalents: the trustee's or expert's fees, then financing, then expenses of continuing the activity.
Official text (Arabic)
This article has not been amended since the law was issued.
تدفع المستحقات قبل إنهاء إجراء التسوية الوقائية أو إجراء التسوية الوقائية لصغار المدينين أو إجراء إعادة التنظيم المالي أو إجراء إعادة التنظيم المالي لصغار المدينين؛ وفق الترتيب الآتي:
أ - أي أتعاب أو مصروفات للأمين أو الخبير يحل أجل سدادها أثناء سير الإجراء.
ب - أي تمويل حصل عليه المدين وفق أحكام الفصل (العاشر) من النظام.
ج - المصروفات اللازمة لاستمرار نشاط المدين أثناء الإجراء بما في ذلك توفير السلع والخدمات وعقود العمل.
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 78 explained in plain English
This article of the Regulations sets the order of paying dues before four procedures end:
- Preventive settlement.
- Preventive settlement for small debtors.
- Financial reorganization.
- Financial reorganization for small debtors.
The order as it appears in the text:
- The fees or expenses of the trustee or the expert that fall due during the course of the procedure.
- The financing the debtor obtained in accordance with the provisions of Chapter Ten of the Bankruptcy Law.
- The expenses necessary to continue the debtor's activity during the procedure, including the supply of goods and services and employment contracts.
Note that the first item is limited to what falls due during the course of the procedure, and that the second is limited to financing the debtor obtained under Chapter Ten of the Law, without the article stating the provisions of that chapter. The third item expressly includes the supply of goods and services and employment contracts.
The article is related to Article 77, which counts the debtor's debts necessary for continuing its activity after the opening as expenses during the procedure. It does not address liquidation procedures; it is limited to the four procedures mentioned.
Anyone who is a trustee, financier or supplier of a debtor in one of these procedures and wants to assess his position is best advised to consult a lawyer who specializes in bankruptcy and commercial cases.
Practical example
A distribution company in Jeddah is in a financial reorganization procedure, and before the procedure ends it owes: fees of the trustee that fell due during the procedure, financing it obtained under Chapter Ten of the Law, and employee salaries and supplier invoices to continue its activity. The trustee's fees are paid first, then the financing, then the expenses of continuing the activity.
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 78 of the Saudi Implementing Regulations of the Bankruptcy Law
What is the order of paying dues before ending financial reorganization?
The fees or expenses of the trustee or expert that fell due during the procedure, then the financing under Chapter Ten of the Law, then the expenses of continuing the activity.
Do the expenses of continuing the activity include workers' salaries?
Yes. The text says they include the supply of goods and services and employment contracts.
Does the article apply to liquidation?
No. The text mentions only preventive settlement and financial reorganization and their small-debtor equivalents.
More articles on Set-Off and Priority of Debts
- Article 54
This article of the Regulations specifies the particulars the distribution decision 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.