Article 97 of the Saudi Bankruptcy Law
المادة 97 من نظام الإفلاس · الفصل الخامس: إجراء التصفية: تعليق المطالبات
The article provides that registering a liquidation request or the judgment opening it suspends claims and voids acts contrary to that, with exceptions for the secured creditor and cases the court assesses.
Official text (Arabic)
This article has not been amended since the law was issued.
1- دون إخلال بأحكام الفصل (الرابع عشر) من النظام، يترتب على قيد طلب افتتاح إجراء التصفية، أو حكم المحكمة بافتتاحه، تعليق المطالبات وذلك حتى تاريخ حكم المحكمة برفض طلب الافتتاح أو حكمها بإنهاء الإجراء.
2- يقع باطلاً كل تصرف يخالف حكم الفقرة (1) من هذه المادة، وللمحكمة من تلقاء نفسها أو بناء على طلب ذي مصلحة أن تقضي باسترداد أي أصل جرى التصرف فيه خلال مدة تعليق المطالبات أو بما تراه مناسباً، وذلك مع مراعاة حقوق الغير (حسن النية)، وللمتضرر أن يتقدم بدعوى التعويض.
3- استثناء من حكم الفقرة (1) من هذه المادة، تأذن المحكمة -بناء على طلب مقدم من الدائن المضمون- بالتنفيذ على أي من أصول التفليسة الضامنة لدين المدين.
4- تنظر المحكمة -خلال مدة تعليق المطالبات- في طلب الدائن الذي وجد عين ماله عند المدين، وذلك وفقاً لما تحدده اللائحة.
5- استثناء من حكم الفقرة (1) من هذه المادة، للمحكمة -بناء على طلب ذي مصلحة- وقف سريان تعليق المطالبات عن مطالبات محددة اتخذ بشأنها إجراء قبل سريان التعليق إذا ثبت لديها أن في ذلك مصلحة للمدين وأغلبية الدائنين.
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 97 explained in plain English
This article sets the rule of the suspension of claims in the liquidation procedure, without prejudice to the provisions of Chapter Fourteen of the law.
1- Start and end of the suspension: It begins with the registration of the request to open the liquidation procedure or the court's judgment opening it, and continues until the date of its judgment rejecting the request to open or its judgment ending the procedure.
2- Penalty for violation: Any act contrary to the suspension is void. The court, on its own motion or at the request of an interested party, may rule to recover any asset disposed of during the suspension period or as it sees fit, taking into account the rights of good-faith third parties, and the injured party may bring a claim for compensation.
3- Exceptions and special cases:
- The secured creditor: The court, at its request, authorizes it to enforce against any of the bankruptcy estate assets securing the debtor's debt.
- Someone who finds their own property with the debtor: The court considers their request during the suspension period, as the Implementing Regulations specify.
- Specific claims on which action was already taken: The court, at the request of an interested party, may stop the suspension from applying to them if action was taken on them before the suspension took effect and the court is satisfied that this serves the interest of the debtor and the majority of creditors.
The purpose of the suspension is to prevent a race among creditors for the debtor's funds, so that the liquidation is conducted in an orderly way. Article 98 complements this provision by protecting those jointly liable with the debtor who gave it security, while Article 96 before it allows precautionary measures after the request is registered. To assess a particular situation, consult a lawyer specializing in bankruptcy and commercial cases.
Practical example
A factory in Riyadh mortgaged its equipment to a bank as security for a loan, and then a request for its liquidation was registered and claims were suspended. Ordinary creditors cannot enforce against the factory's funds during the suspension, but the bank, as a secured creditor, can ask the court for authorization to enforce against the mortgaged equipment.
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 97 of the Saudi Bankruptcy Law
When does the suspension of claims in liquidation start and end?
It starts with the registration of the request to open liquidation or the judgment opening it, and ends with the court's judgment rejecting the request to open or ending the procedure.
Can a secured creditor enforce despite the suspension of claims?
Yes. The court, at its request, authorizes it to enforce against the bankruptcy estate assets securing the debtor's debt.
What is the ruling on disposing of the debtor's funds during the suspension?
Any act contrary to the suspension is void, and the court may rule to recover the asset, taking into account the rights of good-faith third parties, and the injured party may bring a claim for compensation.
More articles on Liquidation of the Debtor's Assets
- Article 7
Article 7 bars the liquidation of any person under another law unless its assets cover all its debts and it is not defaulting, and makes management members jointly liable if this is violated.
1- مع مراعاة ما ورد في المادة (الرابعة) من النظام، لا يصفى أي شخص بموجب نظام آخر إلا إذا كانت أصوله تكفي لسداد جميع ديونه وكان غير متعثر. 2- إذا تم حل المدين وت
- Article 69
The debtor continues to manage its business during financial reorganization under the trustee's supervision, and at the trustee's request the court may remove its control in cases of negligence, mismanagement or criminal acts.
1- دون إخلال بصلاحيات ومهمات الأمين، يستمر المدين في إدارة أعماله ونشاطه خلال فترة إجراء إعادة التنظيم المالي تحت إشراف الأمين. 2- إذا ارتكب المدين أو أحد المسؤ
- Article 90
The court opens liquidation or administrative liquidation after financial restructuring ends if the debtor is distressed or bankrupt, the procedure's conditions are met, and the ending was for specified grounds.
تقضي المحكمة -من تلقاء نفسها أو بناء على طلب من ذي مصلحة- بافتتاح إجراء التصفية أو التصفية الإدارية إذا تحققت الشروط الآتية: أ - أن يكون المدين متعثراً أو مفلسا
- Article 92
The article allows the debtor, a creditor or the competent authority to ask the court to open the liquidation procedure if the debtor is distressed or bankrupt.
دون الإخلال بأحكام الأنظمة ذات العلاقة، للمدين أو الدائن أو الجهة المختصة التقدم إلى المحكمة بطلب افتتاح إجراء التصفية للمدين إذا كان المدين متعثراً أو مفلساً.
- Article 93
The article requires that a liquidation request be accompanied by the information and documents the Implementing Regulations specify to be registered, and sets special conditions where one or more creditors file it.
1- يشترط لقيد طلب افتتاح إجراء التصفية لدى المحكمة أن يقدم الطلب مرافقاً له المعلومات والوثائق ذات العلاقة، وفقاً لما تحدده اللائحة. 2- لا يقيد طلب دائن أو أكثر
- Article 94
A creditor's request to open liquidation is not registered if the debtor disputed the debt before the request, and filing it despite proof of the dispute is an abuse of the procedure.
لا يقيد طلب الدائن بافتتاح إجراء التصفية إذا كان المدين قد نازع الدائن في الدين قبل تقدم الدائن بالطلب. ويعد طلب الدائن افتتاح الإجراء مع وجود ما يثبت منازعة ال
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.