Article 57 of the Saudi Bankruptcy Law
المادة 57 من نظام الإفلاس · الفصل الرابع: إجراء إعادة التنظيم المالي: الإشراف على الإجراء
The trustee supervises the debtor's business during financial reorganization to verify the fairness of the procedure, implementation of the plan, speed of performance and protection of the interests of those affected, under the Bankruptcy Law.
Official text (Arabic)
This article has not been amended since the law was issued.
يشرف الأمين على نشاط المدين خلال فترة إجراء إعادة التنظيم المالي للتحقق من عدالة الإجراء وتنفيذ الخطة على الوجه المحدد بما يضمن سرعة الأداء وتوفير الحماية اللازمة لمصالح المتأثرين بالإجراء، وذلك وفقاً للأحكام الواردة 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 57 explained in plain English
This article sets the trustee's general role during the financial reorganization procedure, which is supervising the debtor's business.
Note the word: The text says the trustee "supervises" the debtor's business; it does not say that it manages it. This article alone does not address the question of who handles day-to-day management.
The aims of supervision as the text states them:
- Verifying the fairness of the procedure.
- Verifying that the plan is carried out as specified.
- Ensuring speed of performance.
- Providing the necessary protection for the interests of those affected by the procedure; the text did not limit them to creditors.
The limit: The trustee exercises its supervision in accordance with the provisions of the Bankruptcy Law, so it does not go beyond what the law authorizes.
Article 58 elaborates this role by listing specific tasks and powers of the trustee, including verifying the soundness of the debtor's management of its business and monitoring its financial operations, attending court hearings and creditors' meetings relating to the debtor and the procedure, and performing what the court assigns, with a duty of honesty and truthfulness. Article 56 also makes clear that one of the trustee's first acts is announcing the opening ruling within 7 days of its appointment and inviting creditors to submit their claims.
To know the limits of the trustee's role in a particular business, it is advisable to consult a lawyer specializing in bankruptcy and commercial cases.
Practical example
A restaurant company in Jeddah is subject to financial reorganization and continues to operate its branches. The trustee follows its business to verify that the plan is carried out as specified and quickly, and that the interests of those affected by the procedure are protected, without going beyond what the provisions of the Bankruptcy Law authorize.
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 57 of the Saudi Bankruptcy Law
What is the role of the financial reorganization trustee?
It supervises the debtor's business during the procedure to verify the fairness of the procedure and that the plan is carried out as specified, ensuring speed of performance and protecting the interests of those affected.
Does the trustee replace the debtor in managing the company?
This article provides that the trustee supervises the debtor's business, and does not alone address the question of day-to-day management.
Does the trustee have unlimited powers?
No. It exercises its supervision in accordance with the provisions of the Bankruptcy Law.
More articles on Financial Reorganization
- Article 41
After a protective settlement ends, the court, on its own initiative or at an interested party's request, opens the appropriate bankruptcy procedure if three conditions are met together.
تقضي المحكمة -من تلقاء نفسها أو بناء على طلب ذي مصلحة- بافتتاح إجراء الإفلاس المناسب إذا تحققت الشروط الآتية: أ- أن يكون المدين متعثراً أو مفلساً. ب- استيفاء شر
- Article 42
The article states who may request the opening of financial reorganization and its three cases, and bars the request if the debtor underwent this procedure in the previous 12 months.
1- دون الإخلال بأحكام الأنظمة ذات العلاقة، للمدين أو الدائن أو الجهة المختصة التقدم إلى المحكمة بطلب افتتاح إجراء إعادة التنظيم المالي للمدين في أي من الحالات ا
- Article 43
A request to open the financial reorganization procedure is filed with the court after submission, accompanied by the relevant information and documents as the Implementing Regulations specify.
يقيد طلب افتتاح إجراء إعادة التنظيم المالي لدى المحكمة بعد تقديمه مرافقاً له المعلومات والوثائق ذات العلاقة، وفقاً لما تحدده اللائحة.
- Article 44
If someone other than the debtor submits a financial reorganization request, the court notifies the debtor within 5 days, and the debtor may object at the hearing in three cases.
إذا تقدم غير المدين بطلب افتتاح إجراء إعادة التنظيم المالي، فعلى المحكمة تبليغ المدين به خلال مدة لا تزيد على (خمسة) أيام من تاريخ تقديمه، وللمدين الاعتراض على
- Article 45
The debtor, owner, manager, officer, board member and auditor are exempted from the Companies Law provisions on a company's losses reaching a specified percentage, as the Implementing Regulations specify.
يعفى المدين أو المالك أو المدير أو المسؤول أو عضو مجلس الإدارة أو مراجع الحسابات من تطبيق أحكام نظام الشركات فيما يخص بلوغ خسائر الشركة نسبة محددة في ذلك النظام
- Article 46Amended by M/89
Filing a financial reorganization request or opening the procedure stays claims for 180 days, extendable by up to 180 days, with cases for an early end.
1- يترتب على قيد طلب افتتاح إجراء إعادة التنظيم المالي أو افتتاحه، تعليق المطالبات لمدة (مائة وثمانين) يوماً، وللمحكمة من تلقاء نفسها، أو بناءً على طلب الأمين أ
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.