Article 88 of the Saudi Bankruptcy Law

المادة 88 من نظام الإفلاس · الفصل الرابع: إجراء إعادة التنظيم المالي: إنهاء الإجراء

A judgment ending the financial restructuring procedure does not relieve the guarantor of the plan's implementation of its obligations, and no creditor must return what it received from the debtor before the ending.

Official text (Arabic)

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

1- لا يترتب على الحكم بإنهاء إجراء إعادة التنظيم المالي إعفاء الضامن لتنفيذ الخطة من التزاماته.

2- لا يلزم أي دائن برد ما حصل عليه من المدين قبل إنهاء 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 88 explained in plain English

This article deals with two effects of a judgment ending the financial restructuring procedure:

The guarantor's obligations remain: If someone guaranteed implementation of the plan, a judgment ending the procedure does not relieve the guarantor of its obligations.
No return: No creditor is required to return what it received from the debtor before the procedure ended.

In practice, this means that the end of the procedure is not in itself a ground for the guarantor of the plan to be released from its guarantee, and that a creditor who received amounts from the debtor before the ending is not required to return them because of the ending. The article does not state the scope or amount of the guarantor's obligations.

This article is connected to Article 87, which lists the cases in which the procedure ends, including full implementation of the plan, its being impossible to implement, the court's refusal to confirm the proposal, and an interested party's request to end because of significant violations. It is also connected to Article 89, which requires the trustee to file the judgment ending the procedure in the bankruptcy register, whereupon its duties end.

Anyone who is a guarantor of the implementation of a plan, or a creditor who is asked to return amounts received from the debtor, would do well to consult a lawyer specializing in bankruptcy and commercial cases.

Practical example

One of the owners of a company in Riyadh undertook to guarantee implementation of its financial restructuring plan, and a supplier received two payments of its dues from the company. The court then ruled to end the procedure. The supplier is not required to return the two payments it received before the ending, and the owner who is the guarantor is not relieved of its obligations because the procedure ended.

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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