Article 122 of the Saudi Bankruptcy Law
المادة 122 من نظام الإفلاس · الفصل الخامس: إجراء التصفية: إنهاء الإجراء
The article sets out two cases in which the court ends the liquidation procedure at the trustee's request, allows it without a hearing, and provides for dissolving a debtor with legal personality.
Official text (Arabic)
This article has not been amended since the law was issued.
1- تقضي المحكمة بإنهاء إجراء التصفية في الحالتين الآتيتين:
أ- إذا تقدم الأمين بطلب إنهاء الإجراء لعدم كفاية حصيلة بيع أصول التفليسة للوفاء بمصروفات إجراء التصفية.
ب- إذا تقدم الأمين بطلب إنهاء الإجراء لاكتمال أعمال التصفية.
وللمحكمة أن تقضي بإنهاء الإجراء دون حاجة لعقد جلسة.
2- تقضي المحكمة في حكمها بإنهاء الإجراء بحل المدين إذا كان شخصاً ذا صفة اعتبارية.
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 122 explained in plain English
This article sets out the two cases in which the court rules to end the liquidation procedure, both of which begin with a request by the trustee:
- The proceeds of selling the bankruptcy estate assets are insufficient to pay the expenses of the liquidation procedure itself, that is, what is collected from selling the assets does not even cover the costs of the procedure.
- The liquidation work is complete, which Article 121 governs by requiring the trustee to ask for the ending when the sale of assets, the lawsuits and the final distribution to the creditors are complete.
The court may rule to end the procedure without the need to hold a hearing.
Dissolving a legal entity: If the debtor is a person with legal personality such as a company, the court rules in its judgment ending the procedure to dissolve the debtor.
Link to administrative liquidation: If the ending is because of the first case (the proceeds being insufficient for the expenses), Article 123 provides that the court opens the administrative liquidation procedure for the debtor and refers the case papers to the Bankruptcy Committee. Ending because the liquidation work is complete does not have that consequence. To assess a particular situation, consult a lawyer specializing in bankruptcy and commercial cases.
Practical example
The liquidation procedure was opened for a trading establishment in Dammam, and the trustee found that the value of its remaining assets was not enough to cover the expenses of the procedure. The trustee applied to the court to end the liquidation for this reason, and the court ruled to end it without holding a hearing, then opened the administrative liquidation procedure and referred the papers to the Bankruptcy Committee under Article 123.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
How we write and review contentA question about Article 122 of Bankruptcy Law?
Describe what happened and specialist lawyers answer. You can write in English.
- Completely free
- Lawyers from the directory answer
- Your name stays hidden
Commercial & Corporate Law lawyers: ask a specialist about your case
Describe your situation briefly and we'll suggest a lawyer who specialises in this law
Commercial & Corporate Law lawyers
Lawyers who handle this kind of case
شركة امتداد النظام للمحاماة والاستشارات المهنية
- Labour & Employment Law
- Criminal Law
- Criminal Law
- Commercial & Corporate Law
Frequently asked questions about Article 122 of the Saudi Bankruptcy Law
When does the court end the liquidation procedure?
In two cases: if the trustee asks to end it because the proceeds of selling the assets are insufficient for the expenses of the liquidation, or because the liquidation work is complete.
Is a hearing needed to end the liquidation?
No. The court may rule to end the procedure without the need to hold a hearing.
What happens to a company when its liquidation ends?
The court rules in its judgment ending the procedure to dissolve the debtor if it is a person with legal personality.
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.