Saudi Arabia issues rules governing cross-border bankruptcy proceedings

The Saudi Minister of Commerce, Majid bin Abdullah Al-Qasabi, has issued the rules governing cross-border bankruptcy proceedings, which will enter in effective from the date of their publication in Official Gazette.

The rules provide that the foreign bankruptcy procedure is intended as a collective judicial or administrative proceeding in a foreign State, even temporary, according to the provisions of a bankruptcy regime, according to which the debtor’s assets and funds are subject to the control or supervision of the foreign court for the purpose of its financial reorganization or liquidation, according to what was published yesterday by the Umm Al newspaper -Qura.

The general principles of cross-border bankruptcy proceedings under Article 3 of the rules included that they do not violate international agreements to which the Kingdom is a party.

The rules included that the court has the right to refuse to take any action if it violates public order in the Kingdom.

Furthermore, the rules do not limit the authority of the court or the trustee to provide any other assistance to the foreign trustee in accordance with the relevant laws of the Kingdom, while taking into account in the application of the provisions contained in the rules of their international character, to strengthen the application of its provisions in uniform manner and taking into account good faith.

The rules stipulate that they are applied in cases in which, for example, the foreign court or the foreign liquidator requests legal assistance from the court in regarding the foreign bankruptcy proceedings, or if the court, the bankruptcy commission or the liquidator requests legal assistance from the foreign court or the foreign liquidator in regarding the bankruptcy procedure pursuant to the system.

It also applies if the debtor is subject to bankruptcy proceedings under the Act and foreign bankruptcy proceedings at the same time, or when an application relating to bankruptcy proceedings or an intervention in it is filed by any creditor or interest from a foreign country in compliance with the provisions of the law.

The rules also stipulate that no bankruptcy proceedings may be commenced under the system after recognition of the main foreign bankruptcy proceedings unless the debtor has assets in the Kingdom, in which case the proceedings and its effects are limited to those assets and any other assets has that must be managed in the open procedure within the framework of these procedures according to the provisions of the system.