Article 109 of the Saudi Bankruptcy Law

المادة 109 من نظام الإفلاس · الفصل الخامس: إجراء التصفية: حقوق التصويت

The article limits voting in the Article 108 cases to holders of undisputed claims, and allows the court, after hearing the trustee's opinion, to let holders of disputed claims vote.

Official text (Arabic)

This article has not been amended since the law was issued.

لا يصوت على الحالات المشار إليها في المادة (الثامنة بعد المائة) من النظام إلا الدائنون ذوو المطالبات غير المتنازع عليها، وللمحكمة بعد الاطلاع على رأي الأمين أن تسمح للدائنين ذوي المطالبات المتنازع عليها بالتصويت على تلك الحالات.

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 109 explained in plain English

This article determines who may vote in the cases mentioned in Article 108, those in which the trustee calls the creditors to a meeting to deliberate and vote, such as multiple offers to buy significant assets, bringing a claim in the interest of the majority of creditors, deferring a sale, or a settlement between the debtor and others.

The rule: Only creditors with undisputed claims vote.

The exception: The court, after reviewing the trustee's opinion, may allow creditors with disputed claims to vote on those cases.

The reasoning is that someone whose claim has not yet been established might influence a decision affecting the rights of the other creditors, so the starting point is to exclude them, but the law left it to the court to decide whether to allow them if it sees fit after hearing the trustee's opinion.

This affects the calculation of the majority: Article 108 makes a decision valid if creditors representing a majority of the value of the claims of the creditors voting vote for it, and anyone who is not entitled to vote is not included in that calculation.

It is followed by Article 110 on claims filed in a financial restructuring when it turns into liquidation. To assess a particular situation, consult a lawyer specializing in bankruptcy and commercial cases.

Practical example

A creditor of a company in liquidation in Jeddah filed a claim for an amount, part of which the trustee objected to, so the claim became disputed. When the creditors are called to vote on offers to buy a significant asset, the creditor may vote only if the court allows it after reviewing the trustee's opinion.

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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