{"id":7269,"date":"2026-10-06T15:55:13","date_gmt":"2026-10-06T12:55:13","guid":{"rendered":"https:\/\/ususlawfirm.com\/saudi-bankruptcy-law\/"},"modified":"2026-10-11T15:14:30","modified_gmt":"2026-10-11T12:14:30","slug":"saudi-bankruptcy-law","status":"publish","type":"post","link":"https:\/\/ususlawfirm.com\/en\/saudi-bankruptcy-law\/","title":{"rendered":"Saudi Bankruptcy Law: Settlement, Restructuring and Liquidation"},"content":{"rendered":"<style>.usus-tbl{border-collapse:collapse;width:100%;max-width:760px;margin:12px 0 20px;font-size:15px}.usus-tbl th{background:#f4eff9;color:#2A124A;font-weight:700;text-align:right;padding:9px 12px;border-bottom:2px solid #C9A227}.usus-tbl td{padding:9px 12px;border-bottom:1px solid #e5ddec;vertical-align:top}<\/style>\n<div dir=\"ltr\" style=\"text-align: left;\">\n<p>If your company or business is in difficulty and can no longer pay its debts, closing down is no longer the only option. The Saudi <strong>Bankruptcy Law<\/strong> (\u0646\u0638\u0627\u0645 \u0627\u0644\u0625\u0641\u0644\u0627\u0633) offers procedures that protect the business and organise its dealings with creditors: from a settlement that protects the company while it keeps trading, to financial restructuring, to an orderly liquidation when there is no hope left. The law was issued by Royal Decree No. (M\/50) dated 28\/5\/1439H, followed by its Implementing Regulations. Here we explain its procedures, who can use them, and when to consider them.<\/p>\n<h2>Bankruptcy procedures<\/h2>\n<table class=\"usus-tbl\">\n<thead>\n<tr>\n<th>Procedure<\/th>\n<th>Purpose<\/th>\n<th>When it fits<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Protective settlement<\/td>\n<td>An agreement with creditors to settle the debts while the debtor keeps running the business<\/td>\n<td>When difficulty is expected or beginning and the business can continue<\/td>\n<\/tr>\n<tr>\n<td>Financial restructuring<\/td>\n<td>A plan to restructure the business and its debts under the supervision of a trustee<\/td>\n<td>When the business is actually in difficulty but can still be rescued<\/td>\n<\/tr>\n<tr>\n<td>Liquidation<\/td>\n<td>Selling the assets and distributing the proceeds to creditors in the order set by law<\/td>\n<td>When there is no realistic chance of continuing<\/td>\n<\/tr>\n<tr>\n<td>Small-debtor procedures<\/td>\n<td>Simplified forms of settlement, restructuring and liquidation<\/td>\n<td>For debtors whose debts are below the threshold set by the Implementing Regulations<\/td>\n<\/tr>\n<tr>\n<td>Administrative liquidation<\/td>\n<td>Liquidation handled by a competent body when assets are insufficient<\/td>\n<td>When the assets do not cover the costs of an ordinary liquidation<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<figure class=\"usus-ig usus-ig-7269-1\"><img class=\"wp-image-8080\" src=\"https:\/\/ususlawfirm.com\/wp-content\/uploads\/2026\/10\/usus-7269-1.webp\" width=\"1200\" height=\"1221\" alt=\"Bankruptcy procedures \u2014 Saudi Bankruptcy Law (Usus Law Firm infographic)\" loading=\"lazy\" decoding=\"async\" srcset=\"https:\/\/ususlawfirm.com\/wp-content\/uploads\/2026\/10\/usus-7269-1.webp 1200w, https:\/\/ususlawfirm.com\/wp-content\/uploads\/2026\/10\/usus-7269-1-768x781.webp 768w, https:\/\/ususlawfirm.com\/wp-content\/uploads\/2026\/10\/usus-7269-1-640x651.webp 640w, https:\/\/ususlawfirm.com\/wp-content\/uploads\/2026\/10\/usus-7269-1-400x407.webp 400w, https:\/\/ususlawfirm.com\/wp-content\/uploads\/2026\/10\/usus-7269-1-367x373.webp 367w\" sizes=\"auto, (max-width: 1200px) 100vw, 1200px\" \/><\/figure>\n<h2>Who can use the law?<\/h2>\n<p>The law applies to individual traders, commercial and professional companies, non-Saudi investors in the specified cases, and others it names. Individuals who are not traders are covered instead by the insolvency rules in the Enforcement Law. Read about the <a href=\"https:\/\/ususlawfirm.com\/en\/saudi-enforcement-law\/\">Enforcement Law and insolvency<\/a>.<\/p>\n<h2>What happens when a procedure is opened?<\/h2>\n<ul>\n<li><strong>Suspension of claims:<\/strong> as a rule, claims and court proceedings against the debtor are suspended for the duration of the procedure, within the limits set by law.<\/li>\n<li><strong>Listing the debts:<\/strong> creditors submit their claims, which are listed and classified.<\/li>\n<li><strong>Voting on the proposal:<\/strong> in a settlement or restructuring, creditors vote on the proposal by the majorities set by law.<\/li>\n<li><strong>The trustee&#8217;s role:<\/strong> a licensed bankruptcy trustee is appointed in the procedures that require one.<\/li>\n<\/ul>\n<p>Bankruptcy applications are heard by the commercial courts. Proceedings are in Arabic, so foreign-language contracts and financial statements will need an Arabic translation. Read about the <a href=\"https:\/\/ususlawfirm.com\/en\/saudi-commercial-courts-law\/\">Commercial Courts Law<\/a>.<\/p>\n<h2>Directors&#8217; liability when the business is in difficulty<\/h2>\n<p>In certain cases the law holds the manager and board members liable if they kept trading or dealt with the company&#8217;s money in a way that harmed creditors while knowing of the difficulty, or if they delayed applying to open a procedure. Acting early therefore protects the manager as well as the company. Read about <a href=\"https:\/\/ususlawfirm.com\/en\/company-director-liability-saudi-arabia\/\">company director liability<\/a>.<\/p>\n<h2>Frequently asked questions<\/h2>\n<h3>Does bankruptcy mean the company closes?<\/h3>\n<p>Not necessarily. The purpose of a protective settlement and of financial restructuring is to keep the business going. Only liquidation ends with the business closing.<\/p>\n<h3>Can a creditor apply to make its debtor bankrupt?<\/h3>\n<p>The law allows a creditor to apply to open certain procedures, such as financial restructuring or liquidation, subject to conditions.<\/p>\n<h3>When should I act if my company is in difficulty?<\/h3>\n<p>Early. The longer the application is delayed, the fewer the options and the greater the liability on management.<\/p>\n<h2>Is your business in difficulty, or are you owed money by one that is?<\/h2>\n<p>The team at <strong>Usus Law Firm<\/strong> handles bankruptcy procedures for debtors and creditors as part of its <a href=\"https:\/\/ususlawfirm.com\/en\/service\/commercial-cases\/\">commercial cases<\/a> and <a href=\"https:\/\/ususlawfirm.com\/en\/service\/commercial-claims-between-companies\/\">commercial claims<\/a> work, in <a href=\"https:\/\/ususlawfirm.com\/en\/lawyer-in-riyadh\/\">Riyadh<\/a> and <a href=\"https:\/\/ususlawfirm.com\/en\/lawyer-in-tabuk\/\">Tabuk<\/a>, and advises in English.<\/p>\n<p style=\"font-size:12.5px;color:#6a6178;border-top:1px solid #e6ddd0;padding-top:10px;margin-top:16px\"><em>This article is general legal information and is not a substitute for advice on your specific case. Court proceedings in Saudi Arabia are in Arabic; the official Arabic text of each law prevails.<\/em><\/p>\n<div class=\"usus-qbox\">\n<h2>Request a quick consultation<\/h2>\n<p>Leave your name and mobile number, and a lawyer from our Riyadh or Tabuk office will call you during working hours. We advise in English.<\/p>\n\n<div class=\"wpcf7 no-js\" id=\"wpcf7-f6963-o1\" lang=\"en-US\" dir=\"ltr\" data-wpcf7-id=\"6963\">\n<div class=\"screen-reader-response\"><p role=\"status\" aria-live=\"polite\" aria-atomic=\"true\"><\/p> <ul><\/ul><\/div>\n<form action=\"\/en\/wp-json\/wp\/v2\/posts\/7269#wpcf7-f6963-o1\" method=\"post\" class=\"wpcf7-form init\" aria-label=\"Contact form\" novalidate=\"novalidate\" data-status=\"init\">\n<fieldset class=\"hidden-fields-container\"><input type=\"hidden\" name=\"_wpcf7\" value=\"6963\" \/><input type=\"hidden\" name=\"_wpcf7_version\" value=\"6.2\" \/><input type=\"hidden\" name=\"_wpcf7_locale\" value=\"en_US\" \/><input type=\"hidden\" name=\"_wpcf7_unit_tag\" value=\"wpcf7-f6963-o1\" \/><input type=\"hidden\" name=\"_wpcf7_container_post\" value=\"0\" \/><input type=\"hidden\" name=\"_wpcf7_posted_data_hash\" value=\"\" \/>\n<\/fieldset>\n<span id=\"wpcf7-6acbbd2ad28e0-wrapper\" class=\"wpcf7-form-control-wrap cf7apps-honeypot-wrap honeypot-qf-wrap\" style=\"position:absolute;width:1px;height:1px;padding:0;margin:-1px;overflow:hidden;clip:rect(0,0,0,0);white-space:nowrap;border:0;\"><label for=\"wpcf7-6acbbd2ad28e0-field\" class=\"hp-message\">Please leave this field empty.<\/label><input id=\"wpcf7-6acbbd2ad28e0-field\"  class=\"wpcf7-form-control wpcf7-text\" type=\"text\" name=\"honeypot-qf\" value=\"\" autocomplete=\"new-password\" tabindex=\"1000\" data-cf7apps-tabindex=\"1000\" \/><\/span>\n<div class=\"usus-qf\">\n<div class=\"f\"><label for=\"q-name\">Name<\/label><span class=\"wpcf7-form-control-wrap\" data-name=\"q-name\"><input size=\"40\" maxlength=\"400\" class=\"wpcf7-form-control wpcf7-text wpcf7-validates-as-required\" id=\"q-name\" autocomplete=\"name\" aria-required=\"true\" aria-invalid=\"false\" placeholder=\"Your name\" value=\"\" type=\"text\" name=\"q-name\" \/><\/span><\/div>\n<div class=\"f\"><label for=\"q-phone\">Mobile<\/label><span class=\"wpcf7-form-control-wrap\" data-name=\"q-phone\"><input size=\"40\" maxlength=\"400\" class=\"wpcf7-form-control wpcf7-tel wpcf7-validates-as-required wpcf7-text wpcf7-validates-as-tel\" id=\"q-phone\" autocomplete=\"tel\" aria-required=\"true\" aria-invalid=\"false\" placeholder=\"05xxxxxxxx\" value=\"\" type=\"tel\" name=\"q-phone\" \/><\/span><\/div>\n<div class=\"f\"><label for=\"q-city\">City<\/label><span class=\"wpcf7-form-control-wrap\" data-name=\"q-city\"><select class=\"wpcf7-form-control wpcf7-select wpcf7-validates-as-required\" id=\"q-city\" aria-required=\"true\" aria-invalid=\"false\" name=\"q-city\"><option value=\"Riyadh\">Riyadh<\/option><option value=\"Tabuk\">Tabuk<\/option><option value=\"Other city\">Other city<\/option><\/select><\/span><\/div>\n<div class=\"f w\"><label for=\"q-msg\">Your case in brief (optional)<\/label><span class=\"wpcf7-form-control-wrap\" data-name=\"q-msg\"><textarea cols=\"40\" rows=\"2\" maxlength=\"600\" class=\"wpcf7-form-control wpcf7-textarea\" id=\"q-msg\" aria-invalid=\"false\" placeholder=\"One or two lines are enough\" name=\"q-msg\"><\/textarea><\/span><\/div>\n<div class=\"s\"><input class=\"wpcf7-form-control wpcf7-submit has-spinner\" type=\"submit\" value=\"Request a call from a lawyer\" \/><\/div>\n<\/div><div class=\"wpcf7-response-output\" aria-hidden=\"true\"><\/div>\n<\/form>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>If your company or business is in difficulty and can no longer pay its debts, closing down is no longer the only option. The Saudi Bankruptcy Law (\u0646\u0638\u0627\u0645 \u0627\u0644\u0625\u0641\u0644\u0627\u0633) offers procedures that protect the business and organise its dealings with creditors: from a settlement that protects the company while it keeps trading, to financial restructuring, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":7298,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[83,81],"tags":[],"class_list":["post-7269","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commercial-law","category-saudi-laws-explained"],"acf":[],"featured_image_src":{"landsacpe":["https:\/\/ususlawfirm.com\/wp-content\/uploads\/2026\/01\/commercial-lawyer-riyadh-tabuk-1140x445.jpg?wsr",1140,445,true],"list":["https:\/\/ususlawfirm.com\/wp-content\/uploads\/2026\/01\/commercial-lawyer-riyadh-tabuk-463x348.jpg?wsr",463,348,true],"medium":["https:\/\/ususlawfirm.com\/wp-content\/uploads\/2026\/01\/commercial-lawyer-riyadh-tabuk-300x300.jpg?wsr",300,300,true],"full":["https:\/\/ususlawfirm.com\/wp-content\/uploads\/2026\/01\/commercial-lawyer-riyadh-tabuk.jpg?wsr",1200,1200,false]},"_links":{"self":[{"href":"https:\/\/ususlawfirm.com\/en\/wp-json\/wp\/v2\/posts\/7269","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ususlawfirm.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ususlawfirm.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ususlawfirm.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ususlawfirm.com\/en\/wp-json\/wp\/v2\/comments?post=7269"}],"version-history":[{"count":1,"href":"https:\/\/ususlawfirm.com\/en\/wp-json\/wp\/v2\/posts\/7269\/revisions"}],"predecessor-version":[{"id":8081,"href":"https:\/\/ususlawfirm.com\/en\/wp-json\/wp\/v2\/posts\/7269\/revisions\/8081"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/ususlawfirm.com\/en\/wp-json\/wp\/v2\/media\/7298"}],"wp:attachment":[{"href":"https:\/\/ususlawfirm.com\/en\/wp-json\/wp\/v2\/media?parent=7269"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ususlawfirm.com\/en\/wp-json\/wp\/v2\/categories?post=7269"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ususlawfirm.com\/en\/wp-json\/wp\/v2\/tags?post=7269"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}