Saudi Gazette report

RIYADH — A number of experts have spoken highly of the new bankruptcy law, describing it as a step in the right direction.

They agreed that the new law will be a valuable addition to the current laws regulating the business sector and will help the Kingdom keep up with similar laws applicable in advanced countries, Al-Riyadh Arabic daily reported on Tuesday.

Turki Fadaq, director of research and advisory at Albilad Capital, said the new bankruptcy law will complement the current laws and regulations in force in the Kingdom.

“It will be beneficial for the stock market because it protects companies that go bankrupt as well as parties involved and affected by such bankruptcy. It also supports the stock market and creates a safe environment for foreign investors,” he said.

Abdulrahman Beeba, legal counselor, said the new law comprises 231 articles which regulate bankruptcy procedures.

It protects the rights of investors and creditors.

The law strengthens the Law of Settlement Against Bankruptcy, which has been in force for quite some time. It also imposes heavy penalties in order to protect debtors.

The new law will empower businesses that are going through difficult times. The law will increase the Kingdom’s investment attractiveness.

“The timing is excellent,”Bader Al-Busaies, managing partner at Al Suwaiket and Al Busaies law firm, told Reuters.

“Lots of companies are facing financial difficulties. Before it was either liquidation or stakeholders had to inject money. The new law is an alternative solution — the international practice has proven that insolvency law offers a good solution for companies.”

The Shoura Council in December approved a draft of the law which consisted of 231 articles in 17 chapters.

It regulated bankruptcy procedures such as settlements and liquidation, for individuals as well as local and foreign companies, according to a government statement at the time.

An earlier draft version created a provision whereby approval of a debt restructuring deal could be achieved if at least two-thirds of creditors approved the plan.

The Kingdom is embarking on an intensive drive to overhaul its economy as it seeks to create an investor-friendly climate.