Article 157 of the Saudi Bankruptcy Law
المادة 157 من نظام الإفلاس · الفصل السابع: إجراء إعادة التنظيم المالي لصغار المدينين: إنهاء الإجراء
The article provides that ending financial reorganization for small debtors does not release the plan's guarantor from its obligations and does not require a creditor to return what it received before the ending.
Official text (Arabic)
This article has not been amended since the law was issued.
1- لا يترتب على الحكم بإنهاء إجراء إعادة التنظيم المالي لصغار المدينين إعفاء الضامن لتنفيذ الخطة من التزاماته.
2- لا يلزم أي دائن برد ما حصل عليه من المدين قبل إنهاء الإجراء.
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 157 explained in plain English
This article deals with two effects of a ruling to end the financial reorganization procedure for small debtors, whichever of the cases in Article 156 the ending was based on.
First: the guarantor of the plan's implementation. If a person guaranteed implementation of the plan, a ruling to end the procedure does not release them from their obligations. The guarantor cannot rely on the procedure having ended to escape what they committed to.
Second: what creditors received. No creditor is required to return what it received from the debtor before the procedure ended. Amounts the creditor received before the ending remain with it under this paragraph.
The purpose of the two provisions is to protect confidence in the plan: a creditor who accepted the plan relying on the existence of a guarantor does not lose that guarantee when the procedure ends, and a creditor who received payments is not asked to return them because of the ending.
The article does not address the extent of the guarantor's obligation or what remains of the debt after the ending. These are matters for which reference is made to the text of the guarantee and other provisions. It is advisable to consult a lawyer specialized in bankruptcy and commercial matters on them.
Practical example
A former partner in a small shop in Medina guaranteed implementation of the reorganization plan, and the court then ended the procedure because the plan could not be implemented. The ending does not release him from his obligations as guarantor, and a supplier that received three payments before the ending is not required to return them.
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 157 of the Saudi Bankruptcy Law
Is the plan's guarantor released if the court ends the reorganization procedure?
No. A ruling to end the procedure does not release the guarantor of the plan's implementation from its obligations.
Must I return amounts I received from the debtor before the procedure ended?
No. No creditor is required to return what it received from the debtor before the procedure ended.
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.