Article 129 of the Saudi Bankruptcy Law
المادة 129 من نظام الإفلاس · الفصل السادس: إجراء التسوية الوقائية لصغار المدينين: الإجراء
The article allows a small debtor that is distressed, bankrupt or expecting distress to issue a decision opening the small debtors' protective settlement and file it with its proposal in the bankruptcy register.
Official text (Arabic)
This article has not been amended since the law was issued.
1- للمدين الصغير إذا كان يتوقع مواجهة اضطرابات مالية يخشى معها تعثره أو كان متعثراً أو مفلساً، أن يصدر قراراً بافتتاح إجراء التسوية الوقائية لصغار المدينين وفق النموذج الذي تصدره لجنة الإفلاس.
2- يعد المدين الصغير المقترح قبل إصدار قراره على أن يتضمن المقترح نبذة عن وضعه المالي وما تحدده اللائحة من وثائق.
3- يودع المدين الصغير قرار افتتاح الإجراء في سجل الإفلاس مرافقاً له نسخة من المقترح، ويسري هذا القرار من تاريخ إيداعه في السجل.
4- يدعو المدين الصغير دائنيه غير المضمونين للتصويت على المقترح، وذلك وفقاً لما تحدده اللائحة.
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 129 explained in plain English
This article explains how the protective settlement procedure for small debtors begins, noting that it is the small debtor itself that issues the decision to open.
1- When is it entitled to do so? In one of three cases:
- If it expects to face financial disturbances that it fears will make it distressed.
- If it is distressed.
- If it is bankrupt.
The decision is issued on the form issued by the Bankruptcy Committee.
2- The proposal: The debtor prepares the proposal before issuing its decision, and it must include a summary of its financial position and the documents the Implementing Regulations specify.
3- Filing and effect: The debtor files the decision in the bankruptcy register with a copy of the proposal, and the decision takes effect from the date it is filed in the register, not from the date it is issued.
4- Calling the creditors: The debtor calls its unsecured creditors to vote on the proposal, as the Implementing Regulations specify.
Article 130 adds that if the proposal includes anything affecting the owners' rights, the debtor must call them to vote at least 21 days before the voting date and before the creditors vote. Article 128 also bars opening the procedure if the debtor was subject to it or to the protective settlement in the preceding 12 months. To assess a particular situation, consult a lawyer specializing in bankruptcy and commercial cases.
Practical example
A restaurant owner in Riyadh noticed that his upcoming obligations would exceed his expected income. He prepared a proposal to settle his debts with a summary of his financial position, then issued a decision opening the protective settlement for small debtors on the Bankruptcy Committee's form, filed it with the proposal in the bankruptcy register, and called his unsecured suppliers to vote on it.
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 129 of the Saudi Bankruptcy Law
Can the protective settlement for small debtors be opened before distress?
Yes, if the small debtor expects to face financial disturbances that it fears will make it distressed, and it may also do so if it is distressed or bankrupt.
When does the decision opening the small debtors' protective settlement take effect?
From the date it is filed in the bankruptcy register along with a copy of the proposal.
Who votes on the settlement proposal?
The small debtor calls its unsecured creditors to vote on the proposal, as the Implementing Regulations specify.
More articles on Small Debtor Bankruptcy Procedures
- Article 102
Opening the liquidation leads to the start of liquidating the bankruptcy estate assets, carried out by the trustee, except what the court approves an individual debtor keeping for the living of the debtor and dependents.
1- يترتب على افتتاح إجراء التصفية البدء في تصفية أصول التفليسة. 2- يتولى الأمين تصفية أصول التفليسة عدا ما وافقت المحكمة على احتفاظ المدين ذي الصفة الطبيعية به
- Article 127
The article states that the aim of the protective settlement for small debtors is to let a small debtor agree with its creditors on settling its debts through simple, low-cost procedures while it keeps managing its business.
يهدف إجراء التسوية الوقائية لصغار المدينين إلى تمكين المدين الصغير من التوصل إلى اتفاق مع دائنيه لتسوية ديونه خلال فترة معقولة عبر إجراءات يسيرة بتكلفة منخفضة و
- Article 128
The article lets a small debtor choose the ordinary protective settlement, and bars it from opening a small debtors' settlement if it was subject to it or to a protective settlement in the preceding 12 months.
1- للمدين الصغير طلب افتتاح إجراء التسوية الوقائية بدلاً من افتتاح إجراء التسوية الوقائية لصغار المدينين. 2- لا يجوز للمدين افتتاح إجراء التسوية الوقائية لصغار
- Article 130
The article requires a small debtor to call the owners to vote on the proposal if it affects their rights, at least 21 days before the voting date and before the creditors vote.
إذا تضمن المقترح ما يؤثر في حقوق الملاك، فعلى المدين الصغير دعوتهم إلى التصويت على المقترح قبل حلول موعد التصويت بـ(واحد وعشرين) يوماً على الأقل وفقاً لما تنص ع
- Article 131
The article lets a small debtor ask the court to suspend claims for no more than 90 days, and explains when that period ends.
1- للمدين الصغير أن يطلب من المحكمة -خلال المدة من افتتاح إجراء التسوية الوقائية لصغار المدينين إلى موافقة الدائنين على المقترح- تعليق المطالبات لمدة لا تزيد عل
- Article 132
The article governs the form of the request to suspend claims and its attachments, and allows the court to ask for supporting documents, including a statement that creditor approval is likely.
1- يُقدم طلب تعليق المطالبات إلى المحكمة وفق النموذج الذي تصدره لجنة الإفلاس، على أن يرفق به نبذة عن مضمون المقترح وما تحدده اللائحة. 2- للمحكمة أن تطلب من المد
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.