Article 193 of the Saudi Bankruptcy Law

المادة 193 من نظام الإفلاس · الفصل الحادي عشر: إثبات رصيد الدين

The article provides that a creditor's claim in liquidation is for what remains of its debt after set-off, and that a balance owed to the debtor is paid to the trustee and becomes part of the estate's assets.

Official text (Arabic)

This article has not been amended since the law was issued.

1- تكون مطالبة الدائن المقدمة منه إلى الأمين في إجراءي التصفية أو التصفية لصغار المدينين بقدر

ما بقي من مقدار دينه بعد إجراء المقاصة.

2- إذا كان مقدار الدين المتبقي بعد المقاصة مستحقاً للمدين في إجراءي التصفية أو التصفية لصغار المدينين، فيؤدى إلى الأمين ويدخل ضمن أصول التفليسة، وإذا كان استحقاقه مستقبلياً أو مبنياً على شرط، فيؤدى إلى الأمين ما يتبقى بعد حلول الأداء واستقرار الوجوب.

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 193 explained in plain English

This article explains what happens after set-off in the liquidation and liquidation for small debtors procedures, and has two cases:

If the balance remains with the creditor: the creditor's claim that it submits to the trustee is for the amount remaining of its debt after set-off, not for its whole original debt.
If the balance remains with the debtor: the remaining amount is paid to the trustee and becomes part of the estate's assets. If this amount falls due in the future or is conditional, what remains is paid to the trustee after the time for performance arrives and the obligation becomes settled.

The meaning of the second case is that a party owing a balance to the debtor does not benefit from the bankruptcy by keeping the amount, but hands it to the trustee so that it enters the assets that are distributed to the creditors. If the amount has not yet fallen due or is conditional, it is paid when it falls due and its obligation becomes settled.

The article is linked to Article 192, which excludes debts and dealings arising after the date of opening from automatic set-off, and to Article 194, which converts debts that are estimated or required to be paid in a foreign currency into Saudi riyals at the exchange rates prevailing on the date of opening, with set-off in another currency permitted by agreement. To assess a particular situation, it is advisable to consult a lawyer specialized in bankruptcy and commercial matters.

Practical example

A customer of a company in liquidation in Jeddah owes it SAR 120,000 and is owed SAR 50,000 by it. After set-off SAR 70,000 remains owed by him, which he pays to the bankruptcy trustee to become part of the estate's assets. If the amount were deferred to a later date, he would pay it to the trustee when that date arrives.

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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