Article 106 of the Saudi Bankruptcy Law
المادة 106 من نظام الإفلاس · الفصل الخامس: إجراء التصفية: بيع الأصول
If the trustee intends to sell an asset worth more than a quarter of the estate's value, it must call the creditors to vote or notify the creditors' committee, and provide the necessary information.
Official text (Arabic)
This article has not been amended since the law was issued.
على الأمين عند عزمه بيع أصل تتجاوز قيمته ربع قيمة أصول التفليسة، دعوة الدائنين إلى التصويت وفقاً لحكم المادة (الثامنة بعد المائة) من النظام أو إبلاغ لجنة الدائنين -إن وجدت- للنظر في الموافقة على البيع، وتزويدهم بأي معلومة لازمة لدراسة جدوى العروض المقدمة لشرائه، على أن يكون ذلك خلال مدة معقولة.
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 106 explained in plain English
This article creates a safeguard for creditors when high-value assets are sold.
When it applies: When the trustee intends to sell an asset whose value exceeds a quarter of the value of the bankruptcy estate assets.
What the trustee must do:
- Call the creditors to vote under Article 108 of the law, or notify the creditors' committee, if there is one, to consider approving the sale.
- Provide them with any information needed to study the feasibility of the offers made to buy the asset.
- Do so within a reasonable period.
The aim is that an asset representing a large part of the bankruptcy estate has a clear effect, once sold, on what the creditors will receive, so the trustee does not decide alone: the matter is put to the creditors or their committee with the information that lets them evaluate the offers. The article does not specify how long a "reasonable period" is.
It comes after Article 105, under which the court determines the assets that are advertised before sale, and before Article 107, which bars certain categories from making purchase offers except at a public auction. To assess a particular situation, consult a lawyer specializing in bankruptcy and commercial cases.
Practical example
The assets of an industrial company in liquidation in Jubail are valued at SAR 40 million in total, including the factory land valued at SAR 15 million. Because the land's value exceeds a quarter of the value of the assets, the trustee must, before selling it, call the creditors to vote under Article 108 or notify the creditors' committee if there is one, providing them with details of the offers to buy.
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 106 of the Saudi Bankruptcy Law
When does the liquidation trustee need the creditors' approval for a sale?
When it intends to sell an asset worth more than a quarter of the value of the bankruptcy estate assets, it calls the creditors to vote under Article 108 or notifies the creditors' committee if there is one.
What information does the trustee give the creditors?
Any information needed to study the feasibility of the offers made to buy the asset, within a reasonable period.
Articles this article refers to
More articles on Liquidation of the Debtor's Assets
- Article 7
Article 7 bars the liquidation of any person under another law unless its assets cover all its debts and it is not defaulting, and makes management members jointly liable if this is violated.
1- مع مراعاة ما ورد في المادة (الرابعة) من النظام، لا يصفى أي شخص بموجب نظام آخر إلا إذا كانت أصوله تكفي لسداد جميع ديونه وكان غير متعثر. 2- إذا تم حل المدين وت
- Article 69
The debtor continues to manage its business during financial reorganization under the trustee's supervision, and at the trustee's request the court may remove its control in cases of negligence, mismanagement or criminal acts.
1- دون إخلال بصلاحيات ومهمات الأمين، يستمر المدين في إدارة أعماله ونشاطه خلال فترة إجراء إعادة التنظيم المالي تحت إشراف الأمين. 2- إذا ارتكب المدين أو أحد المسؤ
- Article 90
The court opens liquidation or administrative liquidation after financial restructuring ends if the debtor is distressed or bankrupt, the procedure's conditions are met, and the ending was for specified grounds.
تقضي المحكمة -من تلقاء نفسها أو بناء على طلب من ذي مصلحة- بافتتاح إجراء التصفية أو التصفية الإدارية إذا تحققت الشروط الآتية: أ - أن يكون المدين متعثراً أو مفلسا
- Article 92
The article allows the debtor, a creditor or the competent authority to ask the court to open the liquidation procedure if the debtor is distressed or bankrupt.
دون الإخلال بأحكام الأنظمة ذات العلاقة، للمدين أو الدائن أو الجهة المختصة التقدم إلى المحكمة بطلب افتتاح إجراء التصفية للمدين إذا كان المدين متعثراً أو مفلساً.
- Article 93
The article requires that a liquidation request be accompanied by the information and documents the Implementing Regulations specify to be registered, and sets special conditions where one or more creditors file it.
1- يشترط لقيد طلب افتتاح إجراء التصفية لدى المحكمة أن يقدم الطلب مرافقاً له المعلومات والوثائق ذات العلاقة، وفقاً لما تحدده اللائحة. 2- لا يقيد طلب دائن أو أكثر
- Article 94
A creditor's request to open liquidation is not registered if the debtor disputed the debt before the request, and filing it despite proof of the dispute is an abuse of the procedure.
لا يقيد طلب الدائن بافتتاح إجراء التصفية إذا كان المدين قد نازع الدائن في الدين قبل تقدم الدائن بالطلب. ويعد طلب الدائن افتتاح الإجراء مع وجود ما يثبت منازعة ال
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.