Article 32 of the Saudi Bankruptcy Law
المادة 32 من نظام الإفلاس · الفصل الثالث: إجراء التسوية الوقائية: طلب تصديق المحكمة على المقترح
Once creditors accept the protective settlement proposal, the debtor must request the court's approval after notifying the creditors, and the court sets the date of the approval hearing.
Official text (Arabic)
This article has not been amended since the law was issued.
إذا قبل الدائنون المقترح، فعلى المدين أن يطلب من المحكمة التصديق عليه، وعليه قبل تقديم طلبه أن يبلغ الدائنين بذلك، وتحدد المحكمة موعداً لجلسة التصديق عليه.
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 32 explained in plain English
This article governs the step that directly follows the creditors' acceptance of the protective settlement proposal, which is requesting the court's approval of it.
The creditors' approval alone is not enough to conclude the matter; the debtor must apply to the court for approval of the proposal. The article imposes three things on the debtor:
- The creditors must have accepted the proposal. Acceptance is determined by the majority set out in Article 31, that is, the approval of every class of creditors by the percentages stated there.
- It must notify the creditors before submitting the request that it will ask the court for approval; it may not submit the request without their knowledge.
- It must submit the request to the court, and the court then sets a date for the approval hearing.
The importance of prior notification is that it lets creditors know the date of the procedure and follow it. This article does not set a particular period for submitting the request or holding the hearing.
Article 33 complements this provision by stating that opening the procedure and approving the proposal do not relieve the debtor of its obligations relating to its business under other laws. Article 31 also provides that the debtor files the voting result with the court as soon as voting ends.
If you are a debtor or creditor in a protective settlement procedure and need to assess your steps, consult a lawyer specializing in bankruptcy and commercial cases.
Practical example
A commercial establishment in Jeddah obtained the approval of all its creditor classes for the protective settlement proposal. Before applying to the court for approval, it sent the creditors a notice that it would request approval, then submitted the request, and the court set a date for the hearing to consider the approval.
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 32 of the Saudi Bankruptcy Law
Does the settlement proposal take effect as soon as creditors approve?
After the creditors accept, the article requires the debtor to request the court's approval of the proposal, and the court sets a date for the approval hearing.
Must creditors be notified before requesting approval?
Yes. The debtor must notify the creditors of the approval request before submitting it to the court.
Who sets the date of the approval hearing?
The court sets the date of the hearing to approve the proposal.
More articles on Protective Settlement
- Article 13
Article 13 allows a debtor at risk of default, defaulting or bankrupt to request the opening of protective settlement, and bars it if it underwent the procedure in the previous twelve months.
1- دون الإخلال بأحكام الأنظمة ذات العلاقة، للمدين التقدم إلى المحكمة بطلب افتتاح إجراء التسوية الوقائية في أي من الحالات الآتية: أ- إذا كان من المرجح أن يعاني م
- Article 14
Article 14 requires the protective settlement request to be accompanied by the proposal, information and documents, and the proposal to include the debtor's financial position and a classification of creditors into classes.
1- يقيد طلب افتتاح إجراء التسوية الوقائية لدى المحكمة بعد تقديمه مرافقاً له المقترح والمعلومات والوثائق ذات العلاقة، وفقاً لما تحدده اللائحة. 2- يجب أن يتضمن ال
- Article 15
Article 15 governs how the court hears a protective settlement application within 40 days, and when it opens the procedure, rejects the application, or adjourns the hearing for up to 21 days.
1- تحدد المحكمة موعداً للنظر في طلب افتتاح إجراء التسوية الوقائية على أن يكون الموعد خلال مدة لا تزيد على (أربعين) يوماً من تاريخ قيد الطلب، وتبلغ المحكمة المدي
- Article 16
Article 16 requires the ruling opening a protective settlement to set a creditors' vote within 40 days, extendable by another 40 days, and requires the debtor to announce the opening within 7 days.
1- تحدد المحكمة في حكمها الصادر بافتتاح إجراء التسوية الوقائية موعداً لتصويت الدائنين على المقترح، على أن يكون الموعد خلال مدة لا تزيد على (أربعين) يوماً من تار
- Article 17
Article 17 allows the debtor to request a stay of claims when applying for a protective settlement, provided it attaches a report from a trustee listed in the register of bankruptcy trustees.
للمدين -عند طلب افتتاح إجراء التسوية الوقائية- أن يطلب من المحكمة تعليق المطالبات، على أن يرفق بطلبه تقريراً معداً من أمين مدرج بقائمة أمناء الإفلاس يتضمن ترجيح
- Article 18
Article 18 sets the stay of claims at no more than 90 days, extendable by 30 days at the debtor's request up to a maximum of 180 days, and explains when the stay ends.
1- دون إخلال بأحكام الفصل (الرابع عشر) من النظام، للمحكمة تعليق المطالبات لمدة لا تزيد على (تسعين) يوماً من تاريخ افتتاح الإجراء، ولها تمديد هذه المدة لـ (ثلاثي
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.