Bankruptcy Commission seeks public input on Bankruptcy Law amendments

The Bankruptcy Commission says the last date of submitting proposed amendments to the Bankruptcy Law is March 6, 2026

The Bankruptcy Commission invited the public to submit their views on proposed amendments to the Bankruptcy Law from Feb. 4 to March 6, 2026, via the “Istitlaa” platform.

The commission said the draft aims to align the statutory provisions governing bankruptcy in line with relevant international best practices and to achieve the objectives of the Bankruptcy Law.

The proposed amendments suggest requiring the inclusion of an overview of the debtor’s financial position and the impact of economic conditions, a statement that the return to creditors voting against the proposal is at least equal to the return they would receive under any liquidation proceedings and any information and documents specified in the implementing regulations.

The draft also provides that, at the request of the relevant public authority, the suspension of claims may be lifted with respect to that authority’s claims related to a declared emergency under the Emergency Law and arising from an emergency event that causes harm to the environment, public health, or public safety, provided that the request is submitted to the court before it issues its ruling approving the list of claims.

The proposed amendments allow the debtor or small debtor to reach an agreement with creditors on a debt restructuring plan prior to the debtor, a creditor, or the competent authority, as applicable, filing an application to open any bankruptcy proceedings or making a judicial deposit.

The draft requires the debtor or small debtor to ensure that the debt restructuring plan includes the information and documents stipulated in the regulations, is approved by the creditors and owners whose statutory and contractual rights are affected by the plan, and contains a statement that the return to creditors voting against the plan is at least equal to the return they would receive under any liquidation proceedings.

The draft further authorizes the debtor or small debtor to agree with a trustee listed on the register of bankruptcy trustees to prepare a report setting out the trustee’s opinion on whether the debt restructuring plan meets the fairness standards under the law, is acceptable, and serves the interests of the majority of creditors.

Under the proposed amendments, if the debtor or small debtor fulfills the stipulated requirements, they must request the court to ratify the debt restructuring plan. Prior to submitting the request, creditors must be notified.

The court will then set a hearing to consider ratification of the plan and may approve it in accordance with the law. Creditors who voted against the plan may object before the court at the ratification hearing on the grounds of a breach of fairness standards, if they reasonably believe the plan causes them harm.

The draft requires the debtor or small debtor to publish and register the ratification of the debt restructuring plan in accordance with the law. Upon court ratification of the plan, the court is granted the authority to take appropriate measures to reject the registration of any application to open bankruptcy proceedings or judicial deposit. If the court rejects ratification of the proposal, any interested party may apply to open any bankruptcy proceedings provided for by law.

The proposed amendments also stipulate that the Bankruptcy Commission shall have an independent annual budget, with its fiscal year aligned with the state’s fiscal year. The commission’s resources will consist of allocations from the state budget, fees collected by the commission for administering administrative liquidation procedures, licenses it issues, services and activities it provides, as determined by the minister, along with payment procedures, as well as any other resources approved by the minister in accordance with applicable laws and regulations.

The commission will open an account with the Saudi Central Bank (SAMA) and may open additional accounts with licensed banks operating in the Kingdom.

Disbursements will be made in accordance with administrative and financial regulations issued by the commission and approved by the minister. All of the commission’s revenues will be deposited into the Ministry of Finance’s current account at SAMA.