Article 108 of the Saudi Bankruptcy Law
المادة 108 من نظام الإفلاس · الفصل الخامس: إجراء التصفية: حقوق التصويت
The trustee must call known creditors to a voting meeting where it considers their approval necessary, and a decision is valid by a majority of the value of the claims of those voting.
Official text (Arabic)
This article has not been amended since the law was issued.
1- دون إخلال بحكم المادة (السادسة بعد المائة) من النظام، على الأمين دعوة الدائنين المعلومة مطالباتهم وعناوينهم لديه إلى اجتماع للمداولة والتصويت لاتخاذ قرار في أي من الحالات التي يرى فيها ضرورة الحصول على موافقتهم، بما في ذلك ما يأتي:
أ- إذا تلقى عروضاً متعددة بشأن شراء أي من أصول التفليسة المؤثرة.
ب- إذا ترجح لديه -بناء على المعلومات والوثائق التي بحوزته- أن إقامة دعوى ضد طرف آخر تصب في مصلحة أغلبية الدائنين.
ج- إذا رأى أن إرجاء بيع أي من أصول التفليسة لفترة معقولة في مصلحة أغلبية الدائنين.
د- إجراء الصلح والتوفيق بين المدين وغيره بما فيه مصلحة أغلبية الدائنين.
2- على الأمين أن يُضمّن دعوته للدائنين الموضوعات المطروحة للتصويت.
3- يعد القرار المتخذ بموجب الفقرة (1) من هذه المادة صحيحاً إذا صوت عليه دائنون يمثلون أغلبية قيمة مطالبات أصوات الدائنين المصوتين.
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 108 explained in plain English
This article governs the creditors' meeting and voting in the liquidation procedure, without prejudice to Article 106.
Who is called: Creditors whose claims and addresses are known to the trustee.
When: In any case where the trustee considers it necessary to obtain their approval, including:
- Receiving several offers to buy any of the significant bankruptcy estate assets.
- If it appears more likely to the trustee, based on the information and documents in its possession, that bringing a claim against another party serves the interest of the majority of creditors.
- If it considers that deferring the sale of any of the assets for a reasonable period serves the interest of the majority of creditors.
- Making a settlement and reconciliation between the debtor and others that serves the interest of the majority of creditors.
These cases are examples and not exhaustive, since the text says "including".
Content of the notice: It must include the matters put to the vote.
Validity of the decision: The decision is valid if creditors representing a majority of the value of the claims of the creditors voting vote for it. What counts is the value of the claims, not the number of creditors, and those who actually voted, not all the creditors.
Article 109 after it sets out who may vote, limiting it to holders of undisputed claims, though the court may allow others. Article 106 requires the trustee to call the creditors to vote under this article, or notify the creditors' committee, when selling an asset worth more than a quarter of the value of the assets. To assess a particular situation, consult a lawyer specializing in bankruptcy and commercial cases.
Practical example
The trustee in the liquidation of a company in Riyadh received three offers to buy its factory. It called the known creditors to a meeting and stated in the notice that the subject was choosing one of the offers. Creditors with claims of SAR 10 million attended, and those holding SAR 6 million of them voted for a particular offer. The decision is valid because they represent a majority of the value of the claims of those voting.
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 108 of the Saudi Bankruptcy Law
How is the majority for a creditors' decision in liquidation calculated?
A decision is valid if creditors representing a majority of the value of the claims of the creditors voting vote for it.
When does the trustee call the creditors to vote?
In any case where it considers their approval necessary, including multiple offers for a significant asset, bringing a claim in the interest of the majority of creditors, deferring a sale, and a settlement between the debtor and others.
Who is called to the creditors' meeting?
Creditors whose claims and addresses are known to the trustee.
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.