INTERVIEW With Waseem Al-Sourani
Abdullah S. Almogheerah,
Secretary General, Bankruptcy Commission
Saudi Arabia
Question:
The global economic headwinds have had its fair share of impact on MENA’s businesses. Is the region adequately equipped to manage a potential spike in corporate insolvencies considering the highly volatile markets?
I can share with you the KSA experience in this regard.
- Concerning the legal infrastructure, you may notice numerous reforms including:
- The enactment of the Saudi bankruptcy law, its implementing regulation, and other related regulations, most recently the rules concerning cross border insolvency issued by the Minister of Commerce decision and published on December 16, 2022.
- The modernization of the Saudi Companies law published July 4, 2022.
- The codification process including the new Evidence law published January 7, 2022, and yet to come a new commercial code and civil code codifying all aspects governing contracts, torts, and property.
- On the other hand, you may notice the increasing number of qualified and repudiated firms well equipped to provide the legal and financial advice to corporates facing financial difficulties as to which approach is the most suitable to address these difficulties whether preventive settlement, financial restructure, or liquidation. These firms may help as well after the initiation of the bankruptcy procedure in managing it.
Question:
How mature and transparent is KSA’s insolvency regime in facilitating debt restructuring for insolvent corporates and enabling businesses get back in operation?- The Saudi bankruptcy law adopted the best practices that the comparative laws have in restructuring insolvent corporates. Some features that may highlight the maturity and flexibility of the Saudi law are:
- The scope of application of the Saudi bankruptcy law extends to wide number of commercial, professional, and profitable economic activities.
- The law provides for a 180 days mortarium from the date of the registration of the request to initiate the FRP extendable for another 180 days.
- The law provides for both voluntary and involuntary reorganization, thus enabling the creditors to request the initiation of financial reorganization of their debtors.
- The financial reorganization provides in principle for the debtor to be in possession. This is to ensure the smooth continuity of the debtor activities and to give him the opportunity to consider the best approach to deal with the financial difficulties.
- The court in financial restructure has the power to decide to ratify the RFP based on a cross class cramdown if the proposal was not voted positively by all the classes of creditors but obtained 50% of all voters in case the court deems it in favor of most creditors and in favor of the business to ratify the proposal.
- The Saudi market has witnessed some success stories after the enactment of the new Bankruptcy Law. Some mega businesses have succeeded in developing and voting positively on a restructuring proposal. A notable example of that would be the case of “Ahmad Hamad Algosaibi and Brothers Company”.
Question:
How has the Bankruptcy Commission been supporting distressed businesses in the Kingdom, and promoting business continuity?
The Bankruptcy Commission plays an important role in supporting and promoting the insolvency system in KSA. This may be reflected in the following areas:
- The Bankruptcy Commission is the standard setter in the area of insolvency. It worked and is still working on developing and revising bankruptcy regulations and norms.
- The Bankruptcy Commission works on setting the standard related to licensing bankruptcy trustees and administering them. It works also on building bankruptcy trustees’ capacities.
- The Bankruptcy Commission administers bankruptcy register and manage notifications related to bankruptcy procedure that are published on the commission website.
- The Bankruptcy Commission is the investigative body concerning violations and crimes that may occur during the administration of bankruptcy procedure.
- The Bankruptcy Commission works on promoting and raising awareness among stakeholders concerning their rights, duties, and responsibilities in bankruptcy procedure. It helps them as well to consider best practices and opportunities associated with financial restructure procedure and other bankruptcy procedure.
- The Bankruptcy Commission provides all sorts of technical support to parties in bankruptcy procedure including forms, templates, custom software, and integrated systems to help them manage the procedure in a cost-efficient way.
Question:
Do you see conferences such as these playing a significant role in promoting conversation and collaboration between stakeholders, pushing the industry forward?
They do play a very important way in promoting conversation and developing mutual understanding in this area. I would like to commend the organizer and thank them for organizing such a wonderful gathering of distinguished expert in the field.
