Article 183 of the Saudi Bankruptcy Law
المادة 183 من نظام الإفلاس · الفصل العاشر: التمويل: التمويل في إجراءات التسوية الوقائية وإعادة التنظيم المالي
The article allows the debtor in protective settlement and financial reorganization to ask the court for approval of secured financing with an expert's report, and the court approves if necessary to continue the business or preserve the estate's assets.
Official text (Arabic)
This article has not been amended since the law was issued.
للمدين في إجراء التسوية الوقائية وإجراء التسوية الوقائية لصغار المدينين وإجراء إعادة التنظيم المالي وإجراء إعادة التنظيم المالي لصغار المدينين أن يطلب من المحكمة بعد افتتاح الإجراء الموافقة على الحصول على تمويل مضمون على أن يرفق بذلك الطلب تقريراً من خبير يؤيده، وتوافق المحكمة على الطلب متى كان لازماً لاستمرار نشاط المدين أو المحافظة على أصول التفليسة خلال فترة 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 183 explained in plain English
This article concerns four procedures: protective settlement, protective settlement for small debtors, financial reorganization, and financial reorganization for small debtors. In them the debtor may ask the court, after the procedure is opened, to approve its obtaining secured financing.
The request must meet the following:
- It must be submitted after the procedure is opened.
- It must be accompanied by a supporting report from an expert.
The court approves the request when the financing is necessary for one of two things during the period of the procedure:
- continuing the debtor's business.
- preserving the assets of the bankruptcy estate.
This article applies the rule in paragraph 1 of Article 182, which does not allow the debtor to obtain secured financing after any of the bankruptcy procedures is opened except after the court's approval in accordance with the provisions of the Law. What counts as secured financing is set out in Article 184, and one form is that the financing has priority over unsecured debts at the time the request is submitted, or is secured by a pledge of a debtor asset on the conditions it sets out.
The aim of the rule is to enable a business that is seeking settlement or reorganization to obtain the liquidity it needs to continue its work, with the court overseeing this financing. To assess a particular situation, it is advisable to consult a lawyer specialized in bankruptcy and commercial matters.
Practical example
A factory in Dammam has had the financial reorganization procedure opened, and needs financing to buy raw materials so that production does not stop; the financier will provide the financing against a pledge of one of the factory's assets. The factory submits a request to the court accompanied by an expert's report supporting the financing, and the court approves if it is shown that the financing is necessary for the continuation of its business during the period of the procedure.
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 183 of the Saudi Bankruptcy Law
Does secured financing in a protective settlement need the court's approval?
Yes. The debtor asks the court, after the procedure is opened, to approve the secured financing.
What document is required with the request for secured financing?
The request must be accompanied by a supporting report from an expert.
When does the court approve secured financing?
It approves when the financing is necessary for the continuation of the debtor's business or for preserving the assets of the bankruptcy estate during the period of the procedure.
More articles on Financing During Bankruptcy
- Article 70
The article lists the acts for which the debtor needs the trustee's written approval from the opening of financial reorganization until the proposal is approved.
1- دون الإخلال بالأنظمة ذات العلاقة، يجب على المدين الحصول على موافقة مكتوبة من الأمين - خلال المدة من افتتاح إجراء إعادة التنظيم المالي إلى التصديق على المقترح
- Article 85
The article sets out the acts requiring the trustee's written approval from confirmation of the proposal until the financial restructuring procedure ends.
1- يجب على المدين الحصول على موافقة مكتوبة من الأمين عند القيام خلال المدة من التصديق على المقترح إلى إنهاء إجراء إعادة التنظيم المالي بأي من الأعمال الآتية: أ-
- Article 101
No security created during the liquidation procedure is valid unless the creditors voted in favor under Article 108 and the court approved it.
لا يصح أي ضمان ينشأ خلال إجراء التصفية ما لم يصوت عليه الدائنون بالموافقة وفقاً لحكم المادة (الثامنة بعد المائة) من النظام وتوافق عليه المحكمة.
- Article 182
The article sets limits on the debtor obtaining secured or unsecured financing after bankruptcy procedures open, and provides that an act contrary to them is void.
1- لا يجوز للمدين الحصول على تمويل مضمون بعد افتتاح أي من إجراءات الإفلاس إلا بعد موافقة المحكمة وفقاً لأحكام النظام. 2- لا يجوز الحصول على تمويل غير مضمون بعد
- Article 184
The article sets out the cases in which financing given to the debtor counts as secured financing, including priority over unsecured debts, pledges on stated conditions, and whatever the Implementing Regulations specify.
يعد التمويل مضموناً إذا كان: أ- ذا أولوية على الديون غير المضمونة وقت تقديم طلب التمويل. ب - مضموناً برهن أصل للمدين ليس محلاً لرهن آخر. ج - مضموناً برهن أصل لل
- Article 185
The article provides that unsecured financing does not need the court's approval in protective settlement and financial reorganization, including the procedures for small debtors.
لا تشترط موافقة المحكمة على التمويل غير المضمون في إجراء التسوية الوقائية أو إجراء التسوية الوقائية لصغار المدينين أو إجراء إعادة التنظيم المالي أو إجراء إعادة
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.