Article 154 of the Saudi Bankruptcy Law
المادة 154 من نظام الإفلاس · الفصل السابع: إجراء إعادة التنظيم المالي لصغار المدينين: النصاب المطلوب في التصويت
The article provides that the proposal is accepted by unanimous secured creditors and by unsecured creditors representing two-thirds of voting debts, including more than half of unrelated parties' debts.
Official text (Arabic)
This article has not been amended since the law was issued.
1- يراعى في عقد اجتماع الدائنين والتصويت الإجراءات الواردة في المقترح، وعلى الأمين التحقق من ذلك.
2- يعد المقترح مقبولاً إذا وافق عليه كل مما يأتي:
أ- الدائنون المضمونون بالإجماع.
ب- الدائنون غير المضمونين الذين تمثل مطالباتهم ثلثي قيمة ديون المصوتين على الأقل، وكان من ضمنهم دائنون تمثل مطالباتهم أكثر من نصف قيمة ديون الأطراف غير ذوي العلاقة (إن وجدوا).
3- تحدد اللائحة آليات تعديل 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 154 explained in plain English
This article sets out the rules for the creditors' meeting and the quorum needed to accept the financial reorganization proposal for small debtors.
Meeting procedures: in holding the creditors' meeting and the vote, the procedures set out in the proposal itself are observed, and the trustee must verify that.
When is the proposal considered accepted? If both of the following approve it together:
- Secured creditors, unanimously; the objection of a single secured creditor is enough for this condition not to be met.
- Unsecured creditors whose claims represent at least two-thirds of the value of the debts of those voting, provided they include creditors whose claims represent more than half of the value of the debts of the unrelated parties, if any.
The last condition prevents the acceptance of the proposal from resting on the votes of related parties alone; approval is required from creditors who are not related parties and whose claims represent more than half of these parties' debts. Note that the two-thirds is calculated from the value of the debts of those voting, not from the total debts of all creditors.
The article is linked to Article 153, which divides creditors into two classes, and to Article 155, which makes the accepted proposal effective. The mechanisms for amending the plan are specified by the Implementing Regulations. To count the votes in a particular situation, it is advisable to consult a lawyer specialized in bankruptcy and commercial matters.
Practical example
In a vote on a proposal of a small establishment, unsecured creditors voted whose debts total SAR 900,000, and those with debts of SAR 600,000 approved, which is two-thirds. For the proposal to be accepted, the approving creditors must still include creditors whose claims represent more than half of the unrelated parties' debts, if any, and the secured creditors must approve unanimously.
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 154 of the Saudi Bankruptcy Law
What quorum is required to accept a financial reorganization proposal for small debtors?
Unanimity of the secured creditors, and the approval of unsecured creditors whose claims represent at least two-thirds of the value of the debts of those voting, including creditors whose claims represent more than half of the unrelated parties' debts, if any.
Is one secured creditor's objection enough to reject the proposal?
The text requires the secured creditors to approve unanimously, so this condition is not met if one of them does not approve.
Who specifies how the plan is amended?
The Implementing Regulations specify the mechanisms for amending the plan.
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.