Article 137 of the Saudi Bankruptcy Law
المادة 137 من نظام الإفلاس · الفصل السادس: إجراء التسوية الوقائية لصغار المدينين: الاعتراض على الخطة
The article lets a creditor who voted against the plan object before the court within 14 days of the vote result being filed, if the creditor reasonably believes it harms them and breaches the fairness standards.
Official text (Arabic)
This article has not been amended since the law was issued.
للدائن الاعتراض على الخطة أمام المحكمة إذا صوت برفضها معتقداً -بناء على سبب معقول- أن الخطة تضر به وأنها تخل بمعايير العدالة المنصوص عليها في المادة (الخامسة والثلاثين) من النظام، على أن يقدم اعتراضه للمحكمة خلال (أربعة عشر) يوماً من تاريخ إيداع نتيجة التصويت لديها.
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 137 explained in plain English
This article gives the objecting creditor judicial protection after the plan becomes binding through the approval of the majority of creditors.
Who may object? A creditor who voted to reject the plan. The article requires a vote of rejection.
Conditions for the objection: the creditor must believe, on a reasonable ground, both of the following:
- that the plan harms them.
- and that it breaches the fairness standards set out in Article 35 of the Law.
Where and when? The objection is submitted to the court within 14 days of the date the vote result is filed with it.
In practical terms, the majority cannot impose a plan that breaches the fairness standards on the minority without oversight, but the objection is bound by a short deadline and specific conditions. To see what the fairness standards are, refer to the text of Article 35.
This article is linked to Article 136, which makes the approved proposal a plan binding on the debtor, the creditors and the owners from the date the vote result is filed with the court. Article 138 allows the court, on the basis of the objection, to suspend the plan's effect for no more than 14 days, during which it rules either that the plan is void or that the objection is rejected, and no creditor is required to return what they received from the debtor before the ruling of voidness. For a particular situation, it is advisable to consult a lawyer specialized in bankruptcy and commercial matters.
Practical example
A supplier in Riyadh voted to reject a settlement plan for a small establishment because it gave him a much lower repayment rate than creditors in a similar position to his. After the establishment filed the vote result with the court, he submitted his objection within 14 days, explaining his reasonable grounds for believing that the plan harmed him and breached the fairness standards.
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 137 of the Saudi Bankruptcy Law
Can a protective settlement plan for small debtors be objected to?
Yes. A creditor who voted to reject it may object before the court if the creditor reasonably believes that it harms them and breaches the fairness standards set out in Article 35.
How long do I have to object to the plan?
14 days from the date the vote result is filed with the court.
Can a creditor who approved the plan object to it?
The article gives the right to object to the creditor who voted to reject the plan.
Articles this article refers to
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 129
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.
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
- 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
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.