Article 14 of the Saudi Bankruptcy Law
المادة 14 من نظام الإفلاس · الفصل الثالث: إجراء التسوية الوقائية طلب افتتاح إجراء التسوية الوقائية
Article 14 requires the protective settlement request to be accompanied by the proposal, information and documents, and the proposal to include the debtor's financial position and a classification of creditors into classes.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يقيد طلب افتتاح إجراء التسوية الوقائية لدى المحكمة بعد تقديمه مرافقاً له المقترح والمعلومات والوثائق ذات العلاقة، وفقاً لما تحدده اللائحة.
2- يجب أن يتضمن المقترح نبذة عن الوضع المالي للمدين وتأثيرات الوضع الاقتصادي عليه وتصنيف الدائنين إلى فئات وفقاً لحكم المادة (التاسعة والعشرين) من النظام.
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 14 explained in plain English
This article explains what the debtor must provide for the request to open protective settlement to be registered with the court.
First: attachments to the request. The request is registered after submission accompanied by:
- The proposal, which is the offer the creditors will vote on.
- The relevant information and documents.
The article did not detail this information and these documents, but referred their determination to the Implementing Regulations.
Second: content of the proposal. The proposal must include at least three elements:
- An outline of the debtor's financial position.
- The effects of the economic situation on it.
- A classification of creditors into classes under the provision of Article 29 of the Law.
The importance of this article is practical: a complete request is a condition for considering it, since Article 15 provides that the court opens the procedure if the debtor has provided the information and documents referred to in Article 14 and exercised due diligence in classifying the creditors fairly, and it may reject the request if it is incomplete without an acceptable justification, or postpone the hearing to request additional information or to amend the classification of creditors.
Article 13 regulates the cases in which a debtor may submit this request in the first place. To prepare a sound proposal it is advisable to use a lawyer specialized in commercial and bankruptcy cases.
Practical example
A contracting company in Riyadh wants to request protective settlement. It prepares a proposal explaining its financial position and the effect of the slowdown in projects on it, classifies its creditors into classes under the provision of Article 29, then attaches it to the request with the documents the Regulations specify so that it is registered with the court.
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 14 of the Saudi Bankruptcy Law
What must a protective settlement proposal include?
It must include an outline of the debtor's financial position, the effects of the economic situation on it, and a classification of creditors into classes under Article 29.
What documents are required to request protective settlement?
The request is accompanied by the proposal and the relevant information and documents, and the Implementing Regulations determine their details.
Articles this article refers to
More articles on Protective Settlement
- Article 13
Article 13 allows a debtor at risk of default, defaulting or bankrupt to request the opening of protective settlement, and bars it if it underwent the procedure in the previous twelve months.
1- دون الإخلال بأحكام الأنظمة ذات العلاقة، للمدين التقدم إلى المحكمة بطلب افتتاح إجراء التسوية الوقائية في أي من الحالات الآتية: أ- إذا كان من المرجح أن يعاني م
- Article 15
Article 15 governs how the court hears a protective settlement application within 40 days, and when it opens the procedure, rejects the application, or adjourns the hearing for up to 21 days.
1- تحدد المحكمة موعداً للنظر في طلب افتتاح إجراء التسوية الوقائية على أن يكون الموعد خلال مدة لا تزيد على (أربعين) يوماً من تاريخ قيد الطلب، وتبلغ المحكمة المدي
- Article 16
Article 16 requires the ruling opening a protective settlement to set a creditors' vote within 40 days, extendable by another 40 days, and requires the debtor to announce the opening within 7 days.
1- تحدد المحكمة في حكمها الصادر بافتتاح إجراء التسوية الوقائية موعداً لتصويت الدائنين على المقترح، على أن يكون الموعد خلال مدة لا تزيد على (أربعين) يوماً من تار
- Article 17
Article 17 allows the debtor to request a stay of claims when applying for a protective settlement, provided it attaches a report from a trustee listed in the register of bankruptcy trustees.
للمدين -عند طلب افتتاح إجراء التسوية الوقائية- أن يطلب من المحكمة تعليق المطالبات، على أن يرفق بطلبه تقريراً معداً من أمين مدرج بقائمة أمناء الإفلاس يتضمن ترجيح
- Article 18
Article 18 sets the stay of claims at no more than 90 days, extendable by 30 days at the debtor's request up to a maximum of 180 days, and explains when the stay ends.
1- دون إخلال بأحكام الفصل (الرابع عشر) من النظام، للمحكمة تعليق المطالبات لمدة لا تزيد على (تسعين) يوماً من تاريخ افتتاح الإجراء، ولها تمديد هذه المدة لـ (ثلاثي
- Article 19
Article 19 requires the debtor to notify its creditors of the stay of claims decision as soon as it is issued, and to exercise due diligence to persuade them to approve the proposal.
يلتزم المدين بتبليغ دائنيه بقرار المحكمة بتعليق المطالبات فور صدوره، وعليه بذل العناية الواجبة خلال مدة تعليق المطالبات لإقناع دائنيه بالتصويت بالموافقة على الم
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.