Article 140 of the Saudi Bankruptcy Law
المادة 140 من نظام الإفلاس · الفصل السادس: إجراء التسوية الوقائية لصغار المدينين: إنهاء الإجراء
The article requires the court to open the appropriate bankruptcy procedure for a distressed or bankrupt small debtor whose settlement was ended on specified grounds and where the new procedure's conditions are met.
Official text (Arabic)
This article has not been amended since the law was issued.
تقضي المحكمة -من تلقاء نفسها أو بناء على طلب من ذي مصلحة- بافتتاح إجراء الإفلاس المناسب إذا تحققت الشروط الآتية:
أ- أن يكون المدين الصغير متعثراً أو مفلساً.
ب- استيفاء شروط افتتاح إجراء الإفلاس المراد افتتاحه.
ج- أن يكون إنهاء إجراء التسوية الوقائية لصغار المدينين مبنياً على الفقرة (ب) أو الفقرة (ج) أو الفقرة (هـ) أو الفقرة (و) أو الفقرة (ز) من المادة (التاسعة والثلاثين بعد المائة) 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 140 explained in plain English
This article addresses a practical question: what happens after the protective settlement for small debtors is ended without succeeding?
The court rules, of its own motion or at the request of an interested party, to open the appropriate bankruptcy procedure if three conditions are met together:
- The small debtor is distressed or bankrupt.
- The conditions for opening the bankruptcy procedure to be opened are met.
- The ending of the settlement was based on one of paragraphs (b), (c), (e), (f) or (g) of Article 139.
Turning to Article 139, these paragraphs are: failure of the quorum or inability to vote (b), voidness of the plan (c), inability to implement it (e), the debtor's unwillingness to continue (f), and material violations or criminalized acts (g).
An ending for completed implementation of the plan (a) or for the opening conditions no longer applying (d) does not fall within this rule.
The article does not specify which type of procedure is opened. It describes it only as "appropriate" and requires that its conditions be met. Article 141 also makes the provisions of other articles of the Law apply to 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
The court ended the protective settlement of a small business in Makkah because the creditors did not approve the proposal by the required quorum. Because the business was distressed, one of the creditors submitted a request, and the court considered whether the conditions for the appropriate bankruptcy procedure were met in order to rule on opening 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 140 of the Saudi Bankruptcy Law
What happens if the protective settlement for small debtors fails?
The court, of its own motion or at the request of an interested party, opens the appropriate bankruptcy procedure if the debtor is distressed or bankrupt, the procedure's conditions are met, and the ending was based on paragraph (b), (c), (e), (f) or (g) of Article 139.
Is a bankruptcy procedure opened after the plan has been fully implemented?
No. An ending for completed implementation of the plan (paragraph (a) of Article 139) is not one of the cases this article mentions.
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.