Article 210 of the Saudi Bankruptcy Law
المادة 210 من نظام الإفلاس · الفصل الثالث عشر: العقوبات والتعاملات القابلة للإلغاء: التعاملات القابلة للإلغاء
The article allows any interested party to object before the court to specified transactions by the debtor made within 12 months before the opening with an unrelated party, or 24 months with a related party.
Official text (Arabic)
This article has not been amended since the law was issued.
1- لكل ذي مصلحة الاعتراض أمام المحكمة على أي تصرف أجراه المدين خلال (الاثني عشر) شهراً السابقة لافتتاح الإجراء مع طرف غير ذي علاقة أو خلال (الأربعة والعشرين) شهراً السابقة للافتتاح مع طرف ذي علاقة، من التصرفات الآتية:
أ- التنازل كلياً أو جزئياً عن أي من أصوله أو حقوقه أو الضمانات المقدمة له.
ب- إبرام صفقة دون مقابل أو بمقابل يقل عن القيمة العادلة.
ج- إبرام صفقة تتضمن تسوية ديون قبل مواعيد استحقاقها أو تسويتها على نحو غير عادل.
د- تقديم ضمانات لديون قبل ثبوتها في ذمته.
هـ- إبراء ذمة مدينه جزئياً أو كلياً في دين مستحق له.
2- لا يقبل الاعتراض بموجب الفقرة (1) من هذه المادة بعد مضي (أربعة وعشرين) شهراً من تاريخ افتتاح 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 210 explained in plain English
This article protects creditors from transactions the debtor carries out before bankruptcy that reduce its funds or prefer some creditors over others, by giving any interested party the right to object before the court to these transactions.
The periods covered:
- 12 months before the opening of the procedure if the transaction was with an unrelated party.
- 24 months before the opening if the transaction was with a related party.
The transactions that may be objected to:
- Waiving, wholly or partly, any of its assets, rights or the security given to it.
- Entering into a transaction for no consideration or for a consideration below fair value.
- Entering into a transaction that involves settling debts before their due dates, or settling them unfairly.
- Giving security for debts before they were established against it.
- Releasing its debtor, wholly or partly, from a debt owed to it.
The time limit for objection: an objection is not accepted after 24 months from the date the procedure was opened.
Article 211 sets out the result of the objection: the court orders the nullity of the transaction and its effects, unless the transaction served the debtor's interest and the debtor was not insolvent or bankrupt when it was carried out. Along with the nullity it orders matters including recovery of the assets and their proceeds or payment of their fair value when recovery is not possible, recovery of the security, and requiring anyone who received sums from the debtor to return them to the bankruptcy trustee. For an assessment of a specific situation, consult a lawyer specializing in bankruptcy and commercial cases.
Practical example
Eighteen months before the opening of the liquidation of a company in Riyadh, the company sold a piece of land to a company owned by one of its partners for half its fair value. Because the buyer is a related party and the sale took place within 24 months before the opening, any creditor may object to the sale before the court, provided he files his objection before 24 months have passed from the date the procedure was opened.
Translated from our Arabic explanation with machine assistance. For guidance only; it does not replace advice from a lawyer on your situation.
How we write and review contentA question about Article 210 of Bankruptcy Law?
Describe what happened and specialist lawyers answer. You can write in English.
- Completely free
- Lawyers from the directory answer
- Your name stays hidden
Civil Litigation & Compensation lawyers: ask a specialist about your case
Describe your situation briefly and we'll suggest a lawyer who specialises in this law
Civil Litigation & Compensation lawyers
Lawyers who handle this kind of case
Dr. Ali Al-Rubaie Law Office and Ittihad Al-Asr Legal Company
Active contributor
Unwan Law Firm
Frequently asked questions about Article 210 of the Saudi Bankruptcy Law
Can a sale made by a company before its bankruptcy be cancelled?
Any interested party may object before the court to a transaction the debtor entered into for no consideration or for less than fair value, if it took place within 12 months before the opening with an unrelated party or 24 months with a related party.
What is the last date to object to the debtor's transactions?
An objection is not accepted after 24 months from the date the procedure was opened.
What happens if the court accepts the objection?
Under Article 211, the court orders the nullity of the transaction and its effects, unless it served the debtor's interest and the debtor was not insolvent or bankrupt when it was carried out, and with the nullity orders recovery and the like.
More articles on Bankruptcy Offenses and Voidable Transactions
- Article 71
At an interested party's request, the court may annul the debtor's disposal of estate assets outside its usual business in breach of Article 70 and recover the assets, taking into account the rights of good-faith third parties.
إذا تصرف المدين في أي من أصول التفليسة خارج نطاق مزاولة نشاطه المعتاد بالمخالفة لحكم الفقرة (1/ن) من المادة (السبعين) من النظام، فللمحكمة أن تقضي -بناء على طلب
- Article 174
The article requires the Bankruptcy Committee to refer the matter to the relevant authority if it sees a need for further verification because of suspicion of a crime or violation in any claim or act.
على لجنة الإفلاس -إذا رأت حاجة لإجراء مزيد من التحقق لوجود شبهة جريمة أو مخالفة منصوص عليها في النظام في أي مطالبة أو تصرف- إحالة الأمر إلى الجهة المعنية.
- Article 200
The article lists acts by an individual debtor, a debtor's managers, board members, officers and others that violate the law if committed before or during bankruptcy and harm others.
دون الإخلال بأحكام الأنظمة ذات العلاقة، يعد مخالفاً لأحكام النظام كل مدين ذي صفة طبيعية أو مدير لدى مدين أو عضو في مجلس إدارته أو مجلس مديريه أو أي من مسؤوليه أ
- Article 201
The article lists acts that violate the Bankruptcy Law if committed by any person before bankruptcy and leading to it, or during it, and harming the parties' rights.
دون الإخلال بأحكام الأنظمة ذات العلاقة، يعد مخالفاً لأحكام النظام كل من ارتكب قبل افتتاح أي من إجراءات الإفلاس واحداً أو أكثر من الأفعال الآتية وأدى إلى افتتاحه
- Article 202
The article lists acts by a creditor, or someone claiming to be one, that violate the law, such as fraudulent claims, harmful arrangements with the debtor and abuse of procedures.
دون الإخلال بأحكام الأنظمة ذات العلاقة، يعد مخالفاً لأحكام النظام كل دائن أو من يدعي هذه الصفة ارتكب قبل افتتاح أي من إجراءات الإفلاس واحداً أو أكثر من الأفعال
- Article 203
The article sets the penalty for the acts criminalized in Articles 200, 201 and 202: imprisonment up to 5 years and a fine up to SAR 5 million or either, with possible bans on managing establishments.
1- دون الإخلال بأي عقوبة أشد ينص عليها نظام آخر، يعاقب كل من ارتكب أياً من الأفعال المجرّمة المنصوص عليها في المواد (المائتين) و(الأولى بعد المائتين) و(الثانية
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.