Article 184 of the Saudi Bankruptcy Law
المادة 184 من نظام الإفلاس · الفصل العاشر: التمويل: أحكام التمويل المضمون
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.
Official text (Arabic)
This article has not been amended since the law was issued.
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 للمدين يكون محلاً لرهن آخر ذي أولوية أعلى من الرهن الجديد.
د - مضموناً برهن أصل للمدين يكون ذا أولوية أعلى أو مكافئة لرهن آخر إذا ثبت للمحكمة أن حقوق المرتهن صاحب الرهن القائم لن تتأثر، أو وافق المرتهن في الرهن القائم على وجود رهن ذي أولوية أعلى أو مكافئة لأولويته على رهنه. ويجب على المدين ضمان حماية حقوق المرتهن في الرهن القائم مما قد يؤثر على استيفاء حقوقه من المال المرهون، بما في ذلك نقص قيمة المال المرهون أو رهن المال محل الرهن لطرف آخر أو استعمال المدين للأصل المرهون أو بيعه أو تأجيره له مع بقائه مشغولاً بالرهن.
هـ - أي صورة أخرى من صور التمويل المضمون التي تحددها اللائحة.
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 184 explained in plain English
This article defines secured financing in the Bankruptcy Law, treating financing as such if one of the following forms is met:
- It has priority over unsecured debts at the time the financing request is submitted.
- It is secured by a pledge of a debtor asset that is not pledged to anyone else.
- It is secured by a pledge of an asset already pledged under another pledge with higher priority than the new pledge, meaning that the new pledge ranks after the existing one.
- It is secured by a pledge of an asset with higher or equal priority to the existing pledge, and this is so only in one of two cases: the court is satisfied that the existing pledgee's rights will not be affected, or the existing pledgee agrees to it.
- Any other form of secured financing specified by the Implementing Regulations.
In the fourth form, the article requires the debtor to ensure protection of the rights of the existing pledgee from anything that may affect the satisfaction of its right from the pledged property, including a decline in the value of the pledged property, pledging it to another party, or the debtor's use, sale or lease of it while it remains encumbered by the pledge.
The article is linked to Article 183, which allows the debtor in protective settlement and financial reorganization to ask for the court's approval of secured financing, and to Article 185, which does not require the court's approval for unsecured financing in these procedures; so knowing whether financing is secured or not determines whether it needs the court's approval. To assess a particular situation, it is advisable to consult a lawyer specialized in bankruptcy and commercial matters.
Practical example
A company in Riyadh in the financial reorganization procedure has a building pledged to a bank, and wants new financing from another financier secured by a pledge of the same building with priority equal to the bank's pledge. This is achieved only if the court is satisfied that the bank's rights will not be affected or the bank agrees, and the company must protect the bank's rights from any decline in the building's value.
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 184 of the Saudi Bankruptcy Law
May an asset that is already pledged be pledged to obtain financing during bankruptcy?
Yes. Financing counts as secured by a pledge of an asset pledged under another pledge with higher priority than the new pledge, and the new pledge may also have higher or equal priority if the court is satisfied that the existing pledgee's rights will not be affected or it agrees.
What is the debtor's duty toward the holder of the existing pledge?
It must ensure protection of its rights from anything that may affect their satisfaction from the pledged property, such as a decline in its value, pledging it to another party, or its use, sale or lease while it remains encumbered by the pledge.
Are the forms of secured financing limited to those in the article?
No. The article allows the Implementing Regulations to specify other forms of secured financing.
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 183
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.
للمدين في إجراء التسوية الوقائية وإجراء التسوية الوقائية لصغار المدينين وإجراء إعادة التنظيم المالي وإجراء إعادة التنظيم المالي لصغار المدينين أن يطلب من المحكم
- 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.