Article 161 of the Saudi Bankruptcy Law
المادة 161 من نظام الإفلاس · الفصل الثامن: إجراء التصفية لصغار المدينين: الهدف
The article allows the small debtor, a creditor or the competent authority to request opening the liquidation procedure instead of the liquidation procedure for small debtors.
Official text (Arabic)
This article has not been amended since the law was issued.
للمدين الصغير أو الدائن أو الجهة المختصة طلب افتتاح إجراء التصفية للمدين الصغير بدلاً من إجراء التصفية لصغار المدينين.
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 161 explained in plain English
This article gives an option to those dealing with a small debtor that has reached the liquidation stage. The default is that the small debtor has a simplified procedure, liquidation for small debtors, which Article 160 explains aims to sell the assets of the bankruptcy estate and distribute the proceeds to creditors through simple procedures and low cost under the trustee's management.
But the article allows a request to open the liquidation procedure for the small debtor instead of that simplified procedure.
Who may submit this request?
- The small debtor itself.
- A creditor.
- The competent authority.
The article states no special conditions for this request and no reasons that must be given, and does not detail the procedures for considering it, so reference is made to the other provisions of the Law and its regulations. It provides the right to request, and does not address how it is decided.
The conditions for opening liquidation for small debtors itself are set out in Article 162: the small debtor is distressed or bankrupt, its business cannot continue, and its assets are enough for the procedure's expenses.
To choose the right procedure for a particular business, it is advisable to consult a lawyer specialized in bankruptcy and commercial matters.
Practical example
A major creditor of a small trading establishment in Khobar believes the establishment's situation calls for the liquidation procedure rather than the simplified procedure. This article allows the creditor to request opening the liquidation procedure for the establishment instead of liquidation for small debtors.
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 161 of the Saudi Bankruptcy Law
Can ordinary liquidation be applied to a small debtor?
Yes. The small debtor, a creditor or the competent authority may request opening the liquidation procedure for the small debtor instead of the liquidation procedure for small debtors.
Is only a creditor entitled to request this?
The right is not limited to the creditor. The small debtor and the competent authority have the same right.
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.