Article 138 of the Saudi Bankruptcy Law
المادة 138 من نظام الإفلاس · الفصل السادس: إجراء التسوية الوقائية لصغار المدينين: الاعتراض على الخطة
The article lets the court, on an objection, suspend the plan's effect for no more than 14 days, during which it rules the plan void or rejects the objection, without requiring creditors to return what they received.
Official text (Arabic)
This article has not been amended since the law was issued.
1- للمحكمة -بناء على الاعتراض المقدم إليها- أن تصدر أمراً بتعليق نفاذ الخطة لمدة لا تزيد على (أربعة عشر) يوماً، على أن تقضي خلال هذه المدة ببطلان الخطة أو رفض الاعتراض.
2- إذا قضت المحكمة ببطلان الخطة لا يُلزم أي دائن برد أي مبلغ حصل عليه من المدين الصغير قبل القضاء ببطلان الخطة.
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 138 explained in plain English
This article sets out what the court does when it receives an objection to the plan in the protective settlement procedure for small debtors, and the effect of a ruling of voidness.
1- Suspending the plan's effect:
- The court may, on the objection submitted to it, issue an order suspending the plan's effect. This is at its discretion.
- The suspension may not exceed 14 days.
- During this period the court rules on one of two things: the plan is void or the objection is rejected.
2- Effect of voidness on payments made: if the court rules that the plan is void, no creditor is required to return any amount received from the small debtor before the ruling of voidness.
Article 137 specifies who may object and on what conditions: a creditor who voted to reject the plan, reasonably believing that it harms them and breaches the fairness standards, within 14 days of the filing of the vote result. Article 139 also makes a ruling that the plan is void one of the grounds for ending the protective settlement procedure for small debtors. For a particular situation, it is advisable to consult a lawyer specialized in bankruptcy and commercial matters.
Practical example
A creditor objected to a settlement plan for an establishment in Al-Ahsa, and the court ordered the plan's effect suspended for 10 days, then ruled it void. Another creditor had received SAR 20,000 from the establishment under the plan before the ruling, and was not required to return that amount.
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 138 of the Saudi Bankruptcy Law
Does the court halt the plan's implementation when it is objected to?
On the objection, the court may order the plan's effect suspended for no more than 14 days, during which it rules the plan void or rejects the objection.
Does a creditor return what they received if the court voids the plan?
No. No creditor is required to return any amount received from the small debtor before the ruling that the plan is void.
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.