Article 110 of the Saudi Bankruptcy Law

المادة 110 من نظام الإفلاس · الفصل الخامس: إجراء التصفية: حقوق التصويت

Where liquidation is opened under Article 90, claims filed in the financial restructuring are treated as filed automatically in the liquidation, less what the debtor paid the creditor.

Official text (Arabic)

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

إذا قضت المحكمة بافتتاح إجراء التصفية بناء على المادة (التسعين) من النظام، فتعد المطالبات المقدمة في إجراء إعادة التنظيم المالي مقدمة تلقائياً في إجراء التصفية، ويخصم من قيمة مطالبة الدائن أي مبلغ أداه المدين إليه بموجب ذلك الإجراء.

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 110 explained in plain English

This article deals with the creditors' position when the debtor moves from a financial restructuring procedure to a liquidation procedure.

Scope: It applies if the court rules to open the liquidation procedure under Article 90 of the law.

The provision:

Claims creditors filed in the financial restructuring procedure are treated as filed automatically in the liquidation procedure, so they do not need to be filed again.
Any amount the debtor paid the creditor under the financial restructuring procedure is deducted from the value of the creditor's claim.

The practical benefit of this provision is to ease the burden on creditors and speed up the procedure, while preventing a creditor from receiving more than its due, since what it received during the restructuring is deducted from its claim in the liquidation.

Note that the provision is limited to cases where the liquidation is opened under Article 90, and this article does not address other cases. Article 90 must be consulted for the conditions of that opening.

This article comes after Article 109, which limits voting to holders of undisputed claims, and before Article 111, which requires a creditor to deduct from its claim what a guarantor or another person paid. To assess a particular situation, consult a lawyer specializing in bankruptcy and commercial cases.

Practical example

A supply company filed a claim for SAR 1 million in the financial restructuring of its customer, and received SAR 200,000 under that procedure. The court then ruled to open liquidation under Article 90, so its claim is treated as filed automatically in the liquidation for SAR 800,000 after deducting what it received.

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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