Article 175 of the Saudi Bankruptcy Law
المادة 175 من نظام الإفلاس · الفصل التاسع: إجراء التصفية الإدارية: الإعلان عن التصفية الإدارية وتقديم المطالبات إلى لجنة الإفلاس
The article allows the court, at the Bankruptcy Committee's request, to consider ending the contracts of the debtor's workers connected with its business in accordance with the relevant laws.
Official text (Arabic)
This article has not been amended since the law was issued.
للمحكمة -بناء على طلب لجنة الإفلاس- أن تنظر في إنهاء عقود العاملين لدى المدين ذوي العلاقة بنشاطه وفقاً للأنظمة ذات العلاقة.
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 175 explained in plain English
This article deals with the fate of workers' contracts with the debtor in the administrative liquidation procedure.
Who can make the request? The Bankruptcy Committee.
Who makes the decision? The court; it is the one that considers ending the contracts at the committee's request.
Which contracts? The contracts of the debtor's workers who are connected with its business.
Under what rules? In accordance with the relevant laws. The article does not itself set the provisions on ending or the workers' rights that follow from it, but refers to the other laws that regulate this.
What does this mean in practice?
- Opening administrative liquidation does not automatically end workers' contracts under this article; ending requires a request from the committee and consideration by the court.
- The court considers the request, and the text does not oblige it to grant it.
This comes within the committee's duties in managing the procedure. The article does not state what entitlements follow from ending, so reference is made to the relevant laws. A worker or business owner who needs to assess their position in this procedure may consult a lawyer specialized in bankruptcy and commercial matters.
Practical example
A small establishment in Riyadh entered administrative liquidation with four employees working in its business. The Bankruptcy Committee saw that the business had stopped, so it asked the court to consider ending their contracts, and the court considers the request in accordance with the relevant laws.
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 175 of the Saudi Bankruptcy Law
Do employees' contracts end automatically in administrative liquidation?
This provision does not provide for automatic ending. Rather, the court, at the Bankruptcy Committee's request, may consider ending the contracts of the workers connected with the debtor's business.
Which rules apply to ending workers' contracts in this case?
The ending is considered in accordance with the relevant laws, and this article does not detail those rules.
More articles on Administrative Liquidation
- Article 90
The court opens liquidation or administrative liquidation after financial restructuring ends if the debtor is distressed or bankrupt, the procedure's conditions are met, and the ending was for specified grounds.
تقضي المحكمة -من تلقاء نفسها أو بناء على طلب من ذي مصلحة- بافتتاح إجراء التصفية أو التصفية الإدارية إذا تحققت الشروط الآتية: أ - أن يكون المدين متعثراً أو مفلسا
- Article 122
The article sets out two cases in which the court ends the liquidation procedure at the trustee's request, allows it without a hearing, and provides for dissolving a debtor with legal personality.
1- تقضي المحكمة بإنهاء إجراء التصفية في الحالتين الآتيتين: أ- إذا تقدم الأمين بطلب إنهاء الإجراء لعدم كفاية حصيلة بيع أصول التفليسة للوفاء بمصروفات إجراء التصفي
- Article 123
The article requires the court to open administrative liquidation and refer the papers to the Bankruptcy Committee if it ended the liquidation because the sale proceeds were insufficient for its expenses.
تقضي المحكمة بافتتاح إجراء التصفية الإدارية للمدين إذا قضت بإنهاء الإجراء بموجب الفقرة (1/أ) من المادة (الثانية والعشرين بعد المائة) من النظام، وتحيل أوراق الدع
- Article 158
The article lets the court, of its own motion or at an interested party's request, open liquidation for small debtors or administrative liquidation after reorganization ends, on three conditions.
تقضي المحكمة -من تلقاء نفسها أو بناء على طلب ذي مصلحة - بافتتاح إجراء التصفية لصغار المدينين أو التصفية الإدارية إذا تحققت الشروط الآتية: أ- أن يكون المدين الصغ
- Article 164
The article requires the trustee to ask the court to end liquidation for small debtors as soon as it learns that proceeds from selling the estate's assets will not cover the procedure's expenses.
يلتزم الأمين بتقديم طلب إلى المحكمة لإنهاء إجراء التصفية لصغار المدينين فور علمه بعدم كفاية حصيلة بيع أصول التفليسة للوفاء بمصروفات إجراء التصفية لصغار المدينين
- Article 167
The article states that administrative liquidation aims to sell bankruptcy estate assets whose sale is not expected to produce proceeds enough for the expenses of liquidation or small debtor liquidation.
يهدف إجراء التصفية الإدارية إلى بيع أصول التفليسة التي لا يتوقع أن ينتج عن بيعها حصيلة تكفي للوفاء بمصروفات إجراء التصفية أو إجراء التصفية لصغار المدينين.
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.