Saudi bankruptcy law comes into effect

Saudi Arabia’s new bankruptcy law came into effect on Saturday, Aug. 18, and will be enforced after the Eid Al Adha holidays, the commerce ministry said.

The law was approved in February to regulate bankruptcy procedures that includes preventive settlement, financial restructuring, liquidation, preventive settlement of small debtors, financial restructuring of small debtors, liquidation of small debtors, and administrative liquidation.

The legislation will be the Kingdom’s first formal bankruptcy law and is part of wider reforms to improve the ease of doing business, attract foreign investors, and boost economic growth. 

The bankruptcy law could also be a key step in the development of a legal infrastructure for resolving the situation of struggling banks, Fitch Ratings said in March.

Moreover, the new law will make it easier to deal with the fallout from corporate failures and support the development of small and medium-sized enterprises (SMEs) through improving access to credit, London-based Capital Economics (CE) said in another report.