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May 14, 2020

How Debtors in Saudi Arabia Can Manage Insolvency Risk Post-Covid-19

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Like much of the world, residents in the Kingdom of Saudi Arabia currently live under social distancing measures and government lockdowns. As a result, many businesses, particularly in the retail, food & beverage, entertainment, travel and hospitality sectors, are experiencing unprecedented drops in revenue, which in turn is placing incredible pressure on their cash flows and operations.

While the Kingdom has announced a multibillion-riyal financial assistance programme to help the private sector in this difficult time, it is likely, if not inevitable, that many businesses in the Kingdom will need to consider whether they can remain as a going concern. It is fortunate, therefore, that the Kingdom in 2018 (1439H) adopted the Bankruptcy Law (the BL) and its Implementing Regulations (the BLIR), which were designed to help businesses establish workouts/restructuring plans. Indeed, it is among the stated aims of the BLIR to enable “Distressed Debtors … to restructure [their] financial position and maintain [their] activities with an aim to contribute to the economy and support it.”

This note addresses the applicability of the BL and the BLIR to persons in the Kingdom and considerations for businesses that are approaching, or already in, a distressed situation.

Read “How Debtors in Saudi Arabia Can Manage Insolvency Risk Post-COVID-19.

Authors and Contributors

Marwan Elaraby

Partner

Capital Markets

+971 4 249 2123

+971 4 249 2123

+971 2 410 8123

+971 2 410 8123

Dubai

Matthew Powell

Partner

Mergers & Acquisitions

+971 4 249 2125

+971 4 249 2125

+971 2 410 8125

+971 2 410 8125

Dubai

Dr. Sultan Almasoud

Partner

Mergers & Acquisitions

+966 11 213 7801

+966 11 213 7801

Riyadh

Brendan Hundt

Counsel

Project Development & Finance

+966 11 213 7805

+966 11 213 7805

+971 2 249 2160

+971 2 249 2160

Riyadh

Sanjarbek Abdukhalilov

Consultant

Mergers & Acquisitions

+966 11 213 7802

+966 11 213 7802

Riyadh