argomento: Novita' normative e proposte di legge

Keywords: centro degli interessi principali del debitore (COMI) - Recognition - UNCITRAL Model Law

Abdulrahman Al-Dulaijan

Outlook Paese – Una nuova rubrica dell’Osservatorio – Arabia Saudita

Con questo contributo, l’Osservatorio Internazionale della Crisi d’Impresa inaugura la rubrica «Outlook Paese», dedicata alla disciplina della crisi d’impresa e dell’insolvenza nei diversi ordinamenti giuridici.

in particolare, la rubrica si propone di offrire ai lettori una panoramica dei principali istituti e caratteristiche dei sistemi concorsuali nazionali, con particolare attenzione alle riforme legislative. L’obiettivo è fornire un primo strumento di orientamento a professionisti e studiosi interessati a conoscere gli ordinamenti di altri paesi.

Ad inaugurare la rubrica è un contributo di Abdulrahman Al-Dulaijan, Managing Partner di Russell Bedford DLJ, società di consulenza con sede ad Al Khobar, in Arabia Saudita. Il contributo è dedicato alla disciplina saudita della crisi d’impresa e dell’insolvenza a seguito della riforma del 2018, con particolare attenzione agli strumenti di risanamento e alla regolamentazione dell’insolvenza transfrontaliera..

La Direzione

Saudi Arabia’s Bankruptcy Law: An Evolving Rescue and Cross-Border Framework

By Abdulrahman Al-Dulaijan, Managing Partner, Russell Bedford DLJ
Publication | 28 September 2026

This article provides a general overview and does not constitute legal advice. References to the “Law” are to the Saudi Bankruptcy Law issued by Royal Decree No. M/50 dated 28 Jumada I 1439H (14 February 2018). References to the “Cross-Border Rules” are to the Rules of Cross-Border Bankruptcy Proceedings, effective from 16 December 2022.

Executive summary

Saudi Arabia’s Bankruptcy Law has transformed the Kingdom’s approach to financial distress. Enacted in 2018 as part of a wider effort to improve the business environment, strengthen credit markets and support Vision 2030, it replaced a fragmented framework with procedures designed not only for orderly liquidation but also for early intervention and business rescue.

The Law provides seven procedures: protective settlement, financial restructuring, liquidation, three corresponding procedures for small debtors, and administrative liquidation [1]. The appropriate route depends on the debtor’s financial condition, prospects for rescue, size and available assets. The regime extends to qualifying companies and other for-profit entities, natural persons engaged in profit-making activity, and certain non-Saudi investors. Regulated entities are subject to an additional approval requirement.

Four features are particularly important for international practitioners.

• The Cross-Border Rules provide a framework, based on the UNCITRAL Model Law on Cross-Border Insolvency, for access, recognition, relief and cooperation in multinational cases.
• The Law offers genuine rescue tools, including debtor-led protective settlement, trustee-supervised financial restructuring, moratoria, creditor voting and access to post-commencement financing.
• Simplified procedures seek to make formal insolvency processes more proportionate for small debtors. Published guidance identifies the relevant debt threshold as SAR 2 million, subject to verification of the current regulatory position.
• Natural-person coverage is tied to commercial, professional or other profit-making activity. The Law is not a general consumer-bankruptcy code, and liquidation does not automatically discharge a natural person’s unpaid debts.

The framework is both rescue-oriented and creditor-conscious. Its continued development will depend not only on the legislation, but also on timely financial disclosure, credible valuations, effective creditor participation, experienced officeholders and a growing body of published decisions.

Legislative framework and institutions

Article 5 sets out the Law’s principal objectives: enabling debtors facing financial difficulty to restructure and resume business, protecting creditors and treating them fairly, maximising estate value, ensuring proper asset sales and distributions, and reducing the cost and duration of proceedings—particularly for small debtors. Where an estate cannot fund an ordinary or small-debtor liquidation, administrative liquidation provides a separate route.

The framework assigns distinct functions to the courts, the Bankruptcy Commission, trustees and sectoral regulators. The Commercial Court opens and supervises procedures, resolves disputes, and issues the necessary judgments and orders. The Bankruptcy Commission, operating under the identity Eisar, maintains the Bankruptcy Register, licenses trustees and experts, issues professional rules and forms, and administers administrative liquidations. A licensed trustee performs the functions assigned under the relevant procedure, including supervising a restructuring or administering and realising a liquidation estate.

Regulated entities face an additional gateway requirement. Under Article 3, a petition or judicial deposit concerning such an entity cannot be registered without the relevant competent authority’s approval or deemed approval.

The Law also distinguishes between different states of financial difficulty. A distressed debtor has stopped paying a debt when due; a bankrupt debtor’s debts have consumed all assets; and certain rescue procedures are available where financial difficulty is reasonably anticipated. This distinction matters because intervention before a business exhausts its value can improve the prospects of a viable restructuring.

Article 4 extends the Law to natural persons carrying on commercial, professional or other profit-making activity in the Kingdom. It also covers certain non-Saudi investors that hold assets or conduct licensed profit-making activity in Saudi Arabia. In the latter case, the domestic Law applies only to assets located in the Kingdom. The Cross-Border Rules supplement that territorial provision through mechanisms for recognition and cooperation.

Cross-border insolvency

Recognition and cooperation

Article 8 contemplated implementing provisions for cross-border bankruptcy cases. The Cross-Border Rules, effective from 16 December 2022, supplied a framework based on the 1997 UNCITRAL Model Law on Cross-Border Insolvency [2]. They address four connected matters: access to Saudi courts, recognition of foreign proceedings, relief in support of those proceedings, and cooperation between courts and officeholders.

The approach is one of coordinated administration, not the merger of national proceedings into a single worldwide case. A Saudi court retains authority over relief affecting Saudi interests, including local assets, creditor protections and public-policy considerations.

A foreign representative may apply for recognition of a qualifying foreign proceeding. The Rules distinguish a foreign main proceeding, conducted where the debtor has its centre of main interests (COMI), from a foreign non-main proceeding, conducted where the debtor has an establishment. Recognition provides a basis for participation and relief; it does not, by itself, determine every underlying claim or displace the Saudi court’s supervisory role.

In practice, an application calls for evidence of the foreign proceeding, the representative’s authority and the facts supporting its classification. Appropriate documentary evidence and Arabic translations will therefore be important. The public-policy safeguard permits the court to refuse action that would be manifestly contrary to Saudi public policy.

Relief and COMI

Depending on the stage and classification of a proceeding, the court may grant relief intended to preserve assets and facilitate administration. That relief may include stays of actions or execution, restrictions on asset dispositions, evidence-gathering measures, or arrangements concerning the management or realisation of assets. Any relief affecting distributions must account for the protection of creditors and other interested parties.

Recognition of a foreign main proceeding carries significant stay consequences. The Rules nevertheless preserve access to the Saudi court for specified purposes, including steps necessary to preserve a claim or seek the commencement of a domestic procedure. The central task is to restrain value-destructive individual enforcement without removing legitimate procedural rights.

COMI will often be straightforward for a debtor whose management, operations and creditor relationships are concentrated in one jurisdiction. It becomes more difficult where a group separates incorporation, central decision-making, treasury functions, operating assets and financing relationships across several countries. The analysis is factual and must be undertaken for each debtor entity.

Questions concerning the relevant date for assessing COMI, the weight of a registered office and the evidence needed to rebut a presumption may become clearer as Saudi decisions develop. Until then, foreign representatives should prepare evidence of how the debtor is administered and how its affairs appear to creditors, rather than relying on incorporation documents alone.

Creditors and concurrent proceedings

Foreign creditors may seek the commencement of, or participate in, Saudi bankruptcy proceedings and generally have procedural access alongside domestic creditors. That does not mean identical recoveries: security rights and the statutory priority rules continue to govern distributions. Articles 195–198 address the applicable ranking, including estate expenses and other specified categories.

The Cross-Border Rules also address the risk of double recovery. Subject to secured rights, a creditor that has received part-payment abroad should not recover a disproportionately higher share from the Saudi proceeding while creditors of the same class remain less fully paid.

The framework operates in both directions. A Saudi court or officeholder may seek assistance abroad in connection with a domestic proceeding, although the assistance available will depend on the foreign jurisdiction’s law. Recognition of a foreign proceeding likewise does not necessarily prevent a Saudi proceeding. Where proceedings run concurrently, courts and officeholders must coordinate relief while respecting separate assets, security rights and creditor interests.

The Rules provide a substantial legal platform. Their practical significance will be shaped by the speed of urgent relief, the handling of concurrent cases, effective court-to-court and officeholder communication, and the publication of reasoned recognition decisions.

Corporate groups: coordination without consolidation

Saudi groups may be economically integrated through shared treasury arrangements, guarantees, services, assets and management. The Law nevertheless approaches insolvency primarily on an entity-by-entity basis. It does not establish a comprehensive enterprise-group insolvency regime or an express general power to pool group members’ assets and liabilities merely because their businesses operate together.

That distinction has immediate consequences. Each entity’s assets, creditors, contracts, security interests and, in a cross-border case, COMI require separate analysis. Coordination can preserve value, but group convenience should not override the rights of a particular entity’s creditors.

Related-party transactions warrant particular scrutiny. Article 1’s definition of a related party captures specified ownership, control, management, family and business relationships. Related-party status can affect voting and the review of pre-commencement transactions. Article 210 provides a 24-month look-back period for specified transactions involving related parties, compared with 12 months for non-related parties [3].

A group review should therefore examine intercompany loans and current accounts; cash pooling; upstream, downstream and cross-stream guarantees; asset transfers; shared intellectual property; management charges; and the allocation of staff and operating costs. Transactions made during the relevant look-back period may require particular attention where value, security or debt obligations moved between connected entities.

Procedural coordination remains possible without substantive consolidation. Compatible timetables, coordinated information-sharing, aligned valuations and sale processes, and interdependent proposals may help preserve group value. Appointing the same trustee may also be considered where independence and conflicts permit. Separate estate accounts, creditor lists, voting analyses and distributions should nevertheless be maintained unless a specific legal basis supports a different result.

The Cross-Border Rules facilitate recognition and cooperation for individual debtors, but they do not establish a separate Saudi regime based on the 2019 UNCITRAL Model Law on Enterprise Group Insolvency. A multinational group may consequently need several COMI analyses and recognition applications, supported by practical coordination among courts and officeholders.

Procedures for small debtors

The Law provides three dedicated procedures: small debtors’ protective settlement under Articles 127–141, small debtors’ financial restructuring under Articles 142–158, and small debtors’ liquidation under Articles 159–167. The Bankruptcy Commission sets the qualifying criteria in coordination with the Small and Medium Enterprises General Authority. Published guidance identifies a small debtor by reference to debts not exceeding SAR 2 million; practitioners should verify the current Commission decision when assessing eligibility [4].

These procedures recognise that a small business should not bear the same procedural burden as a large corporate group. Simplification does not remove the need for reliable records, creditor notice, compliance with deadlines and a realistic assessment of the proposed outcome.

Small debtors’ protective settlement is debtor-led. An eligible debtor prepares a proposal, deposits the required commencement materials and invites unsecured creditors to vote. Management remains with the debtor. A moratorium should not be assumed to arise automatically; the debtor may seek one from the court where the statutory conditions are satisfied.

Small debtors’ financial restructuring provides greater independent oversight. Depending on the applicable route, it may be initiated by the debtor, a creditor or the competent authority. A licensed trustee is appointed, claims are reviewed, and the debtor develops a proposal with the trustee’s assistance. Commencement gives rise to a moratorium while the proposal is prepared and considered.

Small debtors’ liquidation applies where rescue is not viable but the estate can fund a simplified trustee-led process for verifying claims, selling assets and distributing proceeds. It should be distinguished from administrative liquidation, which addresses estates whose expected proceeds are insufficient to meet the costs of ordinary or small-debtor liquidation.

Early intervention is especially important for smaller businesses. Incomplete accounts, mixed personal and business spending, weak cash-flow forecasts, poor creditor communication and late filing can undermine the advantages of a simplified procedure. Eligibility by debt size is only the starting point; advisers must also assess viability, available assets and likely creditor recoveries.

Natural persons and the limits of relief

Article 4 applies to a natural person engaged in commercial, professional or other profit-making activity in Saudi Arabia. It is not a general insolvency regime for consumers whose liabilities arise solely from household borrowing or personal expenditure.

A qualifying individual may use an available rescue or liquidation procedure if its statutory conditions are met. The Law also recognises basic living needs: Article 66 addresses the retention of what is necessary for the debtor and dependants to maintain a decent standard of living, while Article 102 addresses the retention of required assets in liquidation. Those protections sit alongside duties of disclosure and cooperation and the Law’s sanctions for concealment, misuse of assets and abuse of procedure.

Liquidation does not provide an automatic fresh start. Under Article 125, removal of a natural-person debtor’s name from the Bankruptcy Register after termination of liquidation does not, of itself, cancel unpaid debt [5]. The debtor remains liable unless creditors grant a specific or general discharge. The provision also addresses the treatment of the debtor and outstanding creditor rights during the 24 months following termination.

Corporate insolvency, by contrast, does not automatically transfer company debts to shareholders or managers. Personal exposure may arise on a distinct basis, such as a guarantee, misconduct or statutory liability. Article 7 addresses liability associated with an improper voluntary dissolution or liquidation outside the Bankruptcy Law; Articles 200–203 address specified forms of misconduct and associated penalties.

The distinction between commercially active individuals and consumers is a significant policy choice. A future debate may consider whether honest but over-indebted consumers should have access to a separate framework offering repayment arrangements and conditional relief while maintaining safeguards against fraud and abuse.

Outlook

Saudi Arabia now has a structured insolvency framework spanning early rescue, supervised restructuring, orderly liquidation and cross-border cooperation. For international practitioners, its defining features are the formal recognition process for foreign proceedings, procedural access for foreign creditors, entity-specific COMI analysis, proportional procedures for small debtors and a commercially limited approach to natural-person bankruptcy.

The next stage of development is likely to be shaped as much by practice as by legislation. Published decisions on COMI, recognition, valuation, creditor protection and group coordination would improve predictability. Sound financial information, realistic proposals and skilled trustees will remain indispensable to achieving the Law’s central aim: preserving viable activity while distributing unavoidable losses through a fair and orderly process.

[1] Saudi Bankruptcy Law, Royal Decree No. M/50 of 14 February 2018, Art. 2. Official English translation: https://laws.moj.gov.sa/en/legislation/_ZXh1it653k5JuoCi4LEZQ

[2] Rules of Cross-Border Bankruptcy Proceedings, issued by Ministerial Decision No. 149 and effective from 16 December 2022. Official text: https://www.uqn.gov.sa/details?p=21056. See also UNCITRAL, Saudi Arabia enacts legislation implementing UNCITRAL Model Law on Cross-Border Insolvency (30 March 2023): https://uncitral.un.org/en/news/saudi-arabia-enacts-legislation-implementing-uncitral-model-law-cross-border-insolvency

[3] Saudi Bankruptcy Law, Art. 210(1), concerning challenges to specified pre-commencement transactions involving related and non-related parties: https://laws.moj.gov.sa/en/legislation/_ZXh1it653k5JuoCi4LEZQ

[4] Saudi Bankruptcy Commission, The Journey and the Card of the Small Debtors’ Protective Settlement Procedure, identifying the SAR 2 million threshold: https://bankruptcy.gov.sa/en/KnowledgeCenter/Publications/Documents/M1.pdf

[5] Saudi Bankruptcy Law, Art. 125(1)–(3), concerning the termination of liquidation proceedings and the continuing liability of natural-person debtors: https://laws.moj.gov.sa/en/legislation/_ZXh1it653k5JuoCi4LEZQ