Article 39 of the Saudi Bankruptcy Law
المادة 39 من نظام الإفلاس · الفصل الثالث: إجراء التسوية الوقائية: إنهاء الإجراء
The article lists seven cases in which the court rules to terminate the protective settlement procedure, including completion of the plan, failure to reach the voting majority, and refusal of approval.
Official text (Arabic)
This article has not been amended since the law was issued.
تقضي المحكمة بإنهاء إجراء التسوية الوقائية في أي من الحالات الآتية:
أ - إذا تقدم المدين إلى المحكمة بطلب إنهاء الإجراء لاكتمال تنفيذ الخطة.
ب - إذا لم يتحقق النصاب المطلوب في تصويت الملاك أو الدائنين على المقترح أو تعذر تصويت الملاك أو الدائنين عليه في الموعد المحدد, وذلك دون إخلال بالفقرة (5) من المادة (الحادية والثلاثين) من النظام.
ج - إذا رفضت المحكمة التصديق على المقترح.
د - إذا تقدم المدين بطلب إنهاء الإجراء لكون شروط افتتاح الإجراء لم تعد منطبقة عليه.
هـ - إذا تقدم المدين أو الدائن بطلب إنهاء الإجراء لتعذر تنفيذ الخطة.
و - إذا تقدم المدين بطلب إنهاء الإجراء لعدم رغبته في الاستمرار في إدارة نشاطه أو استكمال تنفيذ الخطة.
ز - إذا تقدم ذو مصلحة بطلب إنهاء الإجراء لوجود مخالفات مؤثرة خلال الإجراء أو لارتكاب المدين لفعل من الأفعال المجرمة في النظام.
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 39 explained in plain English
This article sets out the cases in which the court rules to terminate the protective settlement procedure, which are seven:
- (a) Completion of the plan: if the debtor requests termination for this reason. Article 38 requires the debtor to submit this request when implementation is complete, with every interested party having the right to object within 14 days.
- (b) Failure of the vote: if the required majority is not reached in the owners' or creditors' vote, or they are unable to vote on the set date, without prejudice to paragraph 5 of Article 31 as the text states.
- (c) The court's refusal to approve the proposal.
- (d) Disappearance of the conditions for opening: if the debtor requests termination because the conditions for opening the procedure no longer apply to it.
- (e) Inability to carry out the plan: if the debtor or a creditor requests termination for this reason.
- (f) The debtor's unwillingness to continue: in managing its business or completing the plan, at its request.
- (g) Violations or crimes: if an interested party requests termination because of significant violations during the procedure, or because the debtor committed an act criminalized in the Bankruptcy Law.
Note that some cases arise only at the request of a specific person: the debtor alone in (a), (d) and (f), the debtor or a creditor in (e), and any interested party in (g).
After the termination ruling is issued, Article 40 requires the debtor to file the termination ruling in the bankruptcy register within 5 days.
To assess which case applies to your situation, it is advisable to consult a lawyer specializing in bankruptcy and commercial cases.
Practical example
A hospitality company in Abha began carrying out its protective settlement plan, then its revenues fell sharply and carrying out the plan became impossible. One of the creditors applied to the court to terminate the procedure under paragraph (e), because the text allows the debtor or a creditor to request termination when the plan cannot be carried out.
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 39 of the Saudi Bankruptcy Law
When does a protective settlement end?
It ends by a court ruling in one of the seven cases the article lists, including completion of the plan, failure to reach the voting majority, refusal of approval, and inability to carry out the plan.
Can a creditor ask to terminate a protective settlement?
Yes, when the plan cannot be carried out (paragraph (e)), and also as an interested party if there are significant violations or the debtor committed an act criminalized in the Bankruptcy Law (paragraph (g)).
Can the debtor withdraw from a protective settlement?
The debtor may request termination because it does not wish to continue managing its business or completing the plan, and the court rules to terminate in that case.
Articles this article refers to
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.