Law No. 71 of 2020 Promulgating the Bankruptcy Law

Law No. 71 of 2020
Promulgating the Bankruptcy Law

Articles of Promulgation

Article One

The provisions of the attached Law on Bankruptcy shall apply, and the provisions of the laws on criminal procedure and trials, civil and commercial procedure, and evidence in civil and commercial matters shall apply in respect of any matter for which no provision is made in the attached Law.

Article Two

The court competent to declare bankruptcy in accordance with Article (563) of the Commercial Code shall, of its own motion, refer the bankruptcy proceedings, disputes and grievances pending before it, and all lawsuits arising from bankruptcy, to the Bankruptcy Department in the state in which they stand and without fees. The statements of claim in those lawsuits shall be deemed applications to open declaration of bankruptcy proceedings in accordance with the attached Law and shall be subject to its provisions, and bankruptcy proceedings not completed before this Law comes into force shall be subject to the procedures set out in the provisions of the attached Law.
The circuit established in accordance with Article (15) of Decree-Law No. (2) of 2009 referred to above shall, of its own motion, refer the applications pending before it to the bankruptcy circuit in the state in which they stand and without fees, and the restructuring applications submitted to that circuit shall be deemed applications to open restructuring proceedings in accordance with the attached Law and shall be subject to its provisions.
Judgments ratifying restructuring plans issued in accordance with the provisions of Decree-Law No. 2/2009 shall remain valid and in effect.

Article Three

The provisions of the preceding Article shall not apply to lawsuits and appeals that have been decided, or reserved for judgment, before the date on which this Law comes into force, and the judgments issued therein shall remain subject to the rules governing the means of appeal in force on the date of their issuance.
The Court of Cassation and the Court of Appeal shall continue to hear the appeals filed before them before the date on which this Law comes into force until they are finally decided.
Any measures taken in accordance with Article (565) of the Commercial Code shall be deemed precautionary measures taken by the Bankruptcy Judge in accordance with the provisions of the attached Law, which the Bankruptcy Judge may amend or cancel.

Article Four

The Minister of Commerce and Industry shall issue the Executive Regulations and the decisions necessary for the application of the provisions of the attached Law within six months from the date of publication of this Law in the Official Gazette.

Article Five

Decree-Law No. (2) of 2009 referred to above is hereby repealed, and Articles (555 to 800) of Decree-Law No. (68) of 1980 referred to above are hereby repealed.
Any provision contrary to the provisions of the attached Law is likewise repealed.
* Amended by Decree-Law No. 58 of 2025 (Kuwait Al-Youm, Issue No. 1732, 30 March 2025).

Article Six

The Prime Minister and the Ministers, each within his competence, shall implement this Law, which shall be published in the Official Gazette and shall come into force three months after the date of publication of the Executive Regulations in the Official Gazette.

Bankruptcy Law

Part One – Definitions

Article 1

In applying the provisions of this Law, the following words and expressions shall have the meaning set out opposite each of them:
The Ministry: the Ministry of Commerce and Industry.
The Minister: the Minister of Commerce and Industry.
The Authority: the Capital Markets Authority.
The Central Bank: the Central Bank of Kuwait.
The Unit: the Insurance Unit.
Regulatory Authority: the Central Bank, the Authority, the Ministry or the Unit, each within the limits of the entities subject to its supervision.
Preventive Settlement: proceedings aimed at reaching an agreement between the debtor and its creditors on the preventive settlement proposal in accordance with the provisions of this Law.
Restructuring: proceedings aimed at reaching an agreement between the debtor and its creditors on the restructuring plan, with the assistance of the restructuring Trustee and under the supervision of the Bankruptcy Judge, in accordance with the provisions of the Law.
Bankruptcy: proceedings aimed at the collective settlement of the debtor’s debts towards its creditors through the liquidation of its assets and business and the distribution of the proceeds of liquidation to its creditors, all in accordance with the provisions of this Law.
Composition: the composition on the indebtedness after a final judgment declaring the debtor bankrupt has been issued.
The Application: the application submitted by the persons concerned for the opening of preventive settlement, restructuring or declaration of bankruptcy proceedings, as the case may be, in accordance with the Law.
Trustee: a person licensed by the Authority, or registered with it in the register of auditors, who performs the duties set out in this Law.
Supervisor: a person licensed to perform the work of the Trustee who monitors the implementation of the preventive settlement, restructuring and declaration of bankruptcy proceedings through the information he receives from the debtor or the Trustee and the creditors.
Inspector: a person licensed to perform the work of the Trustee who inspects all of the debtor’s business and records, or inspects specific transactions or events, and submits a report thereon.
Debtor’s Assets: the movable and immovable property owned by the debtor, all financial rights due from third parties, whether due or deferred, the rights attaching to any of them, and anything else that may have a present or future financial value; the debtor’s assets shall not include property that is not subject to seizure in accordance with the law.
Debtor’s Business: the commercial activities carried on by the debtor.
Viability of the Debtor’s Business: the debtor’s business shall be viable if the debtor submits a technical report issued by one of the persons who may perform the duties of Trustees in accordance with this Law, indicating that the following is likely:
1- That the debtor will be able to continue paying its debts that will be subject to the preventive settlement or restructuring in the ordinary course of carrying on its business.
2- That approval of the preventive settlement proposal or the restructuring will result in the debtor’s business returning to profitability.
Debtor’s Debts: the debts owed by the debtor as at the date of issuance of the decision on the opening of the proceedings in accordance with the provisions of this Law, or those arising from an obligation incurred by it before the issuance of the said decision.
Cessation of Payments: failure to pay any debt that has fallen due one week after notice to pay has been served, even if the debtor’s assets are sufficient to pay its debts, and even if the unpaid debt is secured by collateral sufficient to pay it.
Financial Insolvency: the debtor’s assets being insufficient to pay its debts.
Precautionary Measures: the measures taken by a court or the Bankruptcy Judge in accordance with the provisions of this Law for the purpose of preserving and managing the debtor’s assets or the assets of the bankruptcy estate and preventing their concealment, including placing seals on the debtor’s place of business, appointing an interim Trustee to manage its assets, imposing restrictions on the debtor or any party related to the debtor in disposing of its assets, or prohibiting it and any of the members of its board of directors or its managers, or the members of the board of directors or managers of any company related to the debtor, from travelling for a specified period or until a specified event occurs.
Stay of Claims: the stay of any action or enforcement proceeding brought against the debtor where it relates to its assets or debts, including the exercise by secured creditors of any right they may have to take ownership of or sell the mortgaged property without following compulsory enforcement procedures; it shall also include any other applications submitted for the opening of proceedings in accordance with this Law, with the exception of labour actions and personal status actions other than actions relating to estates of deceased persons. Approval of the preventive settlement proposal or the restructuring will result in the debtor’s business returning to profitability.
Insider: a person who has access to undisclosed information relating to the debtor’s business, assets, person, financial position or management which has an effect on its assets or liabilities, its financial condition, the general course of its business or its ability to meet its obligations; the members of the board of directors and the executive management of the debtor, its subsidiaries and its parent company shall be deemed insiders.
Notification: informing of a fact, document or statement of any other matter in accordance with this Law by e-mail, ordinary or registered mail, or any other means approved by the Bankruptcy Department, the Bankruptcy Judge, the Court of Appeal or the Trustee.
Publication: publication in the Official Gazette.
Announcement: announcement in two local daily newspapers, one of which is published in the English language, or any other method determined by the Bankruptcy Judge or the Bankruptcy Department.
Registration: an annotation in the commercial or professional register, or any other registers designated for the registration of traders, professionals, companies or collective investment schemes.
Bankruptcy Committee: the committee formed by a decision of the Minister to perform the duties set out in the Law.
Debts Subject to the Supervision of the Bankruptcy Committee: the debts of companies listed on the stock exchange, collective investment schemes, companies subject to the supervision of the Authority, units subject to the supervision of the Central Bank, insurance companies and wholly State-owned companies, and any other debts which the Bankruptcy Judge assigns the Committee to supervise.
Classification of Creditors: the classification of categories of creditors according to the similarity of their rights towards the debtor, including:
1- Creditors holding ordinary debts.
2- Creditors holding debts secured by a mortgage or a special lien on movable or immovable property, or a general lien on the debtor’s assets.
3- Creditors holding subordinated debts.
4- Creditors holding perpetual sukuk and bonds.
This shall be for the purpose of discussing the preventive settlement proposal or the restructuring plan, or for any other purpose provided for in this Law.
Required Majority: the majority required for the matter submitted to the creditors’ meeting to be deemed approved, which shall be achieved where the following conditions are met:
1- The attendance, at the meeting at which the vote will take place, of the affected creditor or affected creditors holding at least more than half of the affected debts.
2- The approval of the creditor or creditors holding two-thirds of the debts represented at the meeting.
3- The approval of a numerical majority of the affected creditors, after excluding related parties from voting at the meeting.
Affected Creditor: any creditor whose rights are affected by the result of the vote on the matter put forward for discussion and voting at the creditors’ meeting, where the result of the vote will lead to it not obtaining its rights in accordance with its agreement with the debtor.
Holders of Subordinated Debts: the category of creditors that ranks after the ordinary creditor and ahead of holders of perpetual bonds and sukuk that form part of the debtor’s Tier 1 capital, and also ranks ahead of holders of ordinary shares.
Holders of Perpetual Bonds and Sukuk: the category of creditors that ranks after holders of subordinated debts in the ranking of creditors and ahead of holders of ordinary shares.
Related Party: a- If the debtor is a natural person:
1. The debtor’s spouse, a relative by blood or by marriage up to the fourth degree, the debtor’s partner in a joint venture or in a partnership, or the employee, accountant or agent.
2. The legal person controlled directly or indirectly by the debtor.
3. The person whose activity is managed by the debtor under a contract.
4. The person who manages the debtor’s activity under a contract.
b- If the debtor is a legal person:
1. The person who holds control, whether directly or indirectly, over the debtor.
2. The subsidiary of the debtor.
3. The company that is a member of the same group to which the debtor belongs.
4. A member of the debtor’s board of directors or a member of the executive management.
5. A company under the control, joint control or significant influence of the persons referred to in Clause (4) of this definition by virtue of the significant voting power they hold, directly or indirectly.
In determining a related party, regard shall be had to the provisions of the International Accounting Standards in this respect.
Significant Influence: arises where a company owns, directly or indirectly, a percentage of 20% or more in another company, unless it proves the absence of any influence over it; such influence may be evidenced in one of the following ways:
a. Representation on the board of directors of the company.
b. Participation in policy-making processes, including decisions relating to the distribution of dividends or any other distributions.
c. Any material transactions between the two companies.
d. Interchange of managerial personnel.
e. Provision of essential technical information.
Going Concern: an economic undertaking that is valued or sold on the assumption that it will continue to carry on its activity, together with the tangible and intangible elements it comprises, such as the trade name, industrial, commercial or other licences, real estate, movables, tools, equipment, usufruct or lease contracts, goodwill, customer relationships and other tangible and intangible elements of which that undertaking is composed and which are necessary for it to continue to carry on its activity.

Part Two – General Provisions

Chapter One – Scope of Application

Article 2

The provisions of this Law shall apply to:
1- Every natural person who has the capacity of a trader.
2- Kuwaiti companies and branches of foreign companies, with the exception of joint ventures.
3- Collective investment schemes that have legal personality.
Without prejudice to the provisions of this Law concerning the Bankruptcy Department, the Bankruptcy Judge, the Bankruptcy Court and the Court of Appeal and the competences entrusted to each of them, each of the Authority, the Central Bank and the Unit, each within the limits of its competence, may lay down rules regulating preventive settlement, restructuring and declaration of bankruptcy proceedings for securities exchanges, clearing agencies, banks and insurance companies, in a manner different from that provided for in this Law and as required by the nature of these entities; the decisions issued by the Authority, the Central Bank or the Unit in this regard may be challenged before the competent court.

Article 3

An application for preventive settlement, restructuring or declaration of bankruptcy in respect of an indebtedness owed by any of the entities set out in this Article may not be submitted except after the lapse of ten days from the date of notification of the entity set out opposite each of them:
1- Companies in which the State or a public authority or public institution owns more than half of the capital: the notification shall be addressed to the Competent Minister.
2- Insurance companies: the notification shall be addressed to the Unit.
3- Kuwaiti banks or companies subject to the supervision of the Central Bank: the notification shall be addressed to the Central Bank.
4- Boursa Kuwait, the clearing agency, collective investment schemes that have legal personality, or companies subject to the supervision of the Authority: the notification shall be addressed to the Authority.

Bankruptcy Court

Article 4

A Bankruptcy Court consisting of one or more circuits shall be formed at the Court of First Instance, the seat of which shall be determined by a decision of the Minister of Justice with the approval of the Supreme Judicial Council. Each circuit shall consist of three judges, provided that the rank of its presiding judge is not lower than that of a Vice-President of a court, who shall be selected by the General Assembly of the Court. It shall be assisted by a sufficient number of auditors selected by the Authority from among those registered with it, whose remuneration shall be determined in accordance with the rules set out in the Executive Regulations, and the Ministry of Finance shall allocate the financial appropriations necessary for the auditors selected by the Authority in accordance with this Article.
* Replaced by Decree-Law No. 69 of 2026 (Kuwait Al-Youm, Issue No. 1798, 5 July 2026).

Article 5

Subject to the competences conferred on the Bankruptcy Judge under this Law, the Bankruptcy Court shall have jurisdiction to adjudicate disputes arising from the application of this Law and to decide on the applications submitted to it in accordance with its provisions, and the auditors assisting the Court shall perform accounting, financial and economic expert work in every matter in which the Court considers it necessary to seek the assistance of an expert.

Article 6

Judgments issued by the Bankruptcy Court in accordance with this Law shall be enforceable on the basis of their draft and without service, and no enforcement objection may be raised against them; nor may their enforcement be stayed except by a judgment issued by the Court of Appeal on an application for a stay of enforcement submitted in the statement of appeal against the judgment or while the Court of Appeal is hearing the appeal.

Bankruptcy Department

Article 7

A department called the “Bankruptcy Department” shall be established at the Court of First Instance, headed by a judge whose rank is not lower than that of a Vice-President of a court, and comprising a sufficient number of judges of the Court of First Instance, called Bankruptcy Judges, selected by the General Assembly of the Court.
The Bankruptcy Judge shall have jurisdiction to consider the applications for the opening of proceedings submitted to him and the applications related thereto, provided that this does not fall within the jurisdiction of the Bankruptcy Court or any other entity in accordance with the provisions of this Law.
The Bankruptcy Judge shall issue the decisions provided for in this Law without adversarial proceedings.
* The first paragraph was replaced by Decree-Law No. 69 of 2026 (Kuwait Al-Youm, Issue No. 1798, 5 July 2026).

Article 8

Decisions issued by the Bankruptcy Judge in accordance with this Law shall be writs of execution, to which the Bankruptcy Department shall affix the executory formula in accordance with the procedures provided for in the law, and they shall be enforceable immediately upon their issuance and without service. No enforcement objection may be raised against these decisions, nor may their enforcement be stayed except by a decision issued by the Bankruptcy Judge to that effect or by a judgment issued by the Court of Appeal on an application for a stay of enforcement of the decision submitted in the statement of appeal against the decision or while the Court of Appeal is hearing the appeal.

Article 9

The Bankruptcy Department shall have competence over the following:
1. Receiving and registering the applications submitted in accordance with the provisions of this Law.
2. Sending notifications to the persons concerned in accordance with the provisions of this Law.
3. Verifying that applications for preventive settlement, restructuring and declaration of bankruptcy, and any applications submitted pursuant to this Law, contain the information, data and documents provided for in this Law.
4. Issuing all decisions falling within the competence of the Bankruptcy Judge under this Law, notifying the persons concerned thereof, and making an announcement of them and publishing them.
5. Monitoring the management of the debtor’s assets and business and the speed of the progress of the proceedings, and taking the necessary precautionary measures, as set out in this Law.
6. Meeting with the creditors to discuss with them the matters the Bankruptcy Judge sees fit to put before them; the Bankruptcy Judge or whomever he delegates shall chair this type of meeting.
7. Summoning the debtor, its heirs, customers or employees, or any other person, to hear their statements on any matter relating to the debtor’s debts, assets or business.
And any other competences provided for in this Law.

Article 10

The Bankruptcy Department shall submit all applications, notifications, grievances and memoranda submitted to it to the head of the Department or whoever acts on his behalf immediately upon their receipt, so that he may take such action thereon as he deems fit. If the matter relates to a procedure before the Bankruptcy Judge, the Department shall submit them to him no later than the working day following the date of their receipt, so that he may take such action thereon as he deems fit.

Bankruptcy Committee

Article 11

One or more committees, called the Bankruptcy Committee, shall be formed by a decision of the Minister, consisting of at least three members from among the persons who may perform the duties of Trustees in accordance with this Law, and the Committee may include other members with expertise in financial, legal or economic affairs.
The decision forming the Committee shall specify its chairman and his deputy, the term and rules of its work, the executive and procedural rules enabling it to exercise its competences, and the remuneration determined for its members.
The Committee shall have an administrative work team to assist it in carrying out its duties, appointed or seconded by a decision of the Minister, and the Committee may seek the assistance of such experts and specialists as it deems fit to assist it in its work; such assistance shall not be against payment except pursuant to a decision of the Minister, and the Ministry of Finance shall allocate the necessary financial appropriations for the Committee.

Article 12

The Bankruptcy Committee shall have competence over the following:
1. Supervising restructuring, bankruptcy and composition proceedings in respect of the debts subject to the Committee’s supervision.
2. Expressing its opinion on the applications submitted for the opening of proceedings in accordance with this Law in respect of the debts subject to the Committee’s supervision, and expressing its opinion on the preventive settlement proposal, the restructuring plan, the composition and the plan for the liquidation and distribution of the debtor’s assets in respect of these debts.
3. Drawing up a schedule of the fees of Trustees, Supervisors and Inspectors appointed in accordance with the provisions of this Law, and of any costs they incur by reason of preventive settlement, restructuring or bankruptcy proceedings, and submitting it to the Minister for approval.
4. Selecting Trustees and Supervisors, determining their fees and expressing its opinion on their expenses, in the cases where it is decided to appoint a Trustee or Supervisor in accordance with the provisions of this Law.
5. Establishing and organising a register in which the applications submitted in respect of the debts subject to the Committee’s supervision, and the actions taken thereon, are recorded.
6. Submitting periodic reports to the Minister on its work, achievements and proposals concerning the duties entrusted to it under this Law.
7. Organising awareness seminars, holding conferences and workshops, and issuing research and studies relating to the Law.
8. Submitting proposals concerning the Executive Regulations of this Law and the decisions issued in implementation thereof, and any other proposals aimed at developing the Law or developing the procedures for its implementation.
9. Any other competences provided for in this Law or its Executive Regulations or entrusted to it by the Minister.

Chapter Two – Opening of Proceedings

Section One – Submission of Applications

Application by the Debtor

Article 13

The debtor may submit to the Bankruptcy Department an application for the opening of preventive settlement, restructuring or declaration of bankruptcy proceedings within a period not exceeding two months from the date of cessation of payments, or from the date on which information became available to it indicating that it is likely to be unable to pay its debts as they fall due, unless any of the creditors or the Regulatory Authorities has submitted an application for the opening of proceedings within the said period; failure to submit the application within the periods set out in this paragraph shall not result in the application being inadmissible.
The submission by the debtor of an application for the opening of declaration of bankruptcy proceedings shall result in the debtor being divested of the management of its assets as from the date of its submission, and any disposal made by it of its assets as from that date shall be void. This shall not apply to property that is not subject to seizure, or to the funds necessary for the maintenance of the debtor and its dependants and for the legal costs of the application for the opening of proceedings. The application shall be referred to the Bankruptcy Judge on the day of its submission for the appointment of an interim Trustee to manage the debtor’s assets and business.
The Executive Regulations shall set out the minimum amount of the indebtedness which the debtor has ceased to pay or would be unable to pay as it falls due, as referred to in this Article.

Application by Creditors

Article 14

Any creditor holding an ordinary debt, or a group of creditors holding ordinary debts numbering not less than three, where the debtor’s indebtedness to that creditor or group of creditors is not less than the amount determined by the Executive Regulations on the date of submission of the application, may submit an application for restructuring or declaration of bankruptcy if they have previously notified the debtor of the necessity of paying the debt owed by it and it has not proceeded to pay it within one month from the date of notification.
This shall apply to creditors whose debts are secured by a pledge over the debtor’s commercial establishment or by an assignment of rights over the cash flows derived from the debtor’s assets or business; it shall also apply to creditors whose debts are secured by a mortgage or lien, provided that the value of the collateral securing their rights on the date of submission of the application is less than the amount of the debtor’s indebtedness to the creditor submitting the application individually or to the group of creditors submitting the application jointly, by a difference not less than the amount determined by the Executive Regulations.
The opinion of the relevant Regulatory Authority shall be sought before determining the amounts referred to in this Article in respect of debtors subject to its supervision.

Article 15

If the creditor withdraws its claim for its debt by reason of the settlement of that debt, an agreement with the debtor to defer its payment, or for any other reason, the debtor shall not be deemed to have ceased payments.

Application by the Regulatory Authority

Article 16

The Regulatory Authority may submit an application for the opening of restructuring or declaration of bankruptcy proceedings in respect of any debtor subject to its supervision, provided that it submits evidence that the debtor is in a state of cessation of payments or of financial insolvency, or that it expects the debtor to be in either of these states within a period not exceeding one year, and provided that it has written to the debtor and given it an opportunity to respond within a period not exceeding one month.
The Executive Regulations shall set out, after seeking the opinion of the relevant Regulatory Authority, the minimum amount of the indebtedness which the debtor ceases to pay or is expected to cease to pay, and shall also set out the minimum amount of the actual and expected financial insolvency referred to in this Article.

Multiple Applications

Article 17

If more than one application is submitted in respect of indebtedness of the same debtor, they shall all be joined and the proceedings in respect of them shall be taken jointly. If these applications include an application for preventive settlement, an application for restructuring and an application for declaration of bankruptcy, the applications submitted shall be deemed to be an application for the opening of restructuring proceedings as the principal application and an application for the opening of declaration of bankruptcy proceedings as an alternative application, and the Bankruptcy Judge shall issue his decision declaring the application for preventive settlement inadmissible.
If there are several applications submitted by the debtor, the application for the opening of preventive settlement proceedings shall take precedence over restructuring, and the application for restructuring shall take precedence over declaration of bankruptcy; the earliest application shall be deemed the principal application and those following it alternative, and the alternative application may be decided upon only if the Judge has not issued his decision accepting the principal application.

Applications Concerning the Debts of Companies

Article 18

If the debtor is a company, the application may be submitted in respect of its debts even if it is in liquidation or has been declared void by a judgment and has continued as a de facto company.
The submission of the application shall result in the suspension of actions the subject of which is the liquidation of the company or placing it under judicial receivership, pending a decision on the application, unless the Bankruptcy Judge decides otherwise.

Applications Concerning the Debts of a Deceased or Retired Debtor or a Debtor Lacking Capacity

Article 19

Subject to the provisions of Article (14) of this Law, the application may be submitted after the death of the debtor, its retirement from trade or its loss of capacity, within the two years following the death, the removal of the trader’s name from the commercial register or the loss of capacity; notifications in respect of a deceased debtor shall be made at its last domicile without the need to identify the heirs.
Subject to the provisions of Article (13) of this Law, the debtor’s heirs may submit the application within the two years following the death. If the heirs do not unanimously agree to submit the application, it may be submitted by one of them, and the Bankruptcy Judge may in this case decide to dismiss the application or to accept the opening of proceedings, according to what he considers to serve the interest of the creditors of the deceased debtor and of the heirs.
The debtor’s heirs or their legal representatives shall choose a person to represent them in the proceedings in accordance with this Law; if this is not possible within ten days from the date of their notification by the Bankruptcy Department, the Bankruptcy Judge shall assign one of the heirs to represent them, and the Bankruptcy Judge may remove the heirs’ representative and appoint another of the heirs or their legal representatives.

Particulars of the Application

Article 20

The application shall be submitted by the debtor or the Regulatory Authority, stating the action requested and its grounds, and shall be accompanied by the following documents, as the case may be:
1- A memorandum containing a brief description of the debtor’s economic and financial situation and information about its assets, in addition to detailed data on its employees.
2- A copy of the debtor’s commercial or industrial licence and of its commercial registration.
3- A copy of the commercial books or the financial statements relating to the debtor’s business for the three financial years preceding the date of submission of the application.
4- A statement of the lawsuits brought by and against the debtor and the estimated amount of each of them; this statement shall not constitute an acknowledgement by the debtor of the validity of these debts.
5- A statement of all lawsuits, enforcement proceedings or other proceedings that will be stayed as a consequence of the issuance of the decision on the opening of the proceedings in accordance with this Law or pursuant to a decision of the Bankruptcy Judge.
6- A report containing the following:
a- The debtor’s cash flow forecasts and profit and loss forecasts for the year following the submission of the application.
b- A statement of the names of the known creditors and debtors, their electronic and postal addresses, their telephone numbers, the value of their rights or debts and the collateral provided for them, if any, and the classification of these creditors and debtors.
c- A detailed statement of the debtor’s assets and the approximate value of each of these assets on the date of submission of the application, and a statement of any collateral or rights of third parties attaching to them.
7- The nomination of a Trustee proposed by the applicant to perform the duties of restructuring Trustee or bankruptcy estate Trustee in accordance with the provisions of this Law.
8- A statement of whether the debtor is able to manage its assets and wishes to manage them, and the basis for this, or whether the interest of the creditors requires the appointment of a Trustee to take over the management, with the justification and basis for this.
9- A statement of any precautionary measures that the interest of the creditors requires to be taken, and whether the interest of the creditors requires them to be taken urgently, with the justification and basis for this.
10- Whether or not the debtor in respect of which an application for preventive settlement or restructuring is submitted will need to obtain financing during the period from the date of issuance of the decision on the opening of the proceedings until the approval of the preventive settlement or the restructuring plan; and, in the former case, a statement of the estimated total value of the financing it will need during the said period, its purposes, term and collateral, and its effect on the preventive settlement or the restructuring plan and on the rights of secured creditors and other creditors.
11- If the applicant is a company, a copy of the decision of the competent body in the company authorising the applicant to submit the application for the opening of proceedings, and a copy of the company’s incorporation documents and any amendments made thereto, shall be attached to the application.
12- Any other information, data or documents supporting the information contained in the application or requested by the Bankruptcy Department.
If the applicant is unable to submit any of the data, information or documents required in accordance with the provisions of the first paragraph of this Article, it shall state the reasons for this in its application.

Article 21

If the applicant is unable to submit the data, information and documents in accordance with the preceding Article because it is unable to obtain them from the entity holding them, it shall state this, and the Bankruptcy Judge may assign any person holding the required information, data and documents to submit them within a time limit he determines, if he decides that they are necessary for deciding on the application.
No person may refrain from submitting the data, documents and information which the Bankruptcy Judge has assigned him to submit on the ground that the law obliges him to maintain their confidentiality.

Article 22

The application shall be submitted by the creditor stating its grounds, accompanied by a copy of the notification referred to in Article (14) of this Law and any data, information and documents relating to the debt and its collateral.

Application Fees, Expenses and Security Deposit

Article 23

Except for applications submitted by the Regulatory Authorities, the applicant shall deposit with the court treasury a sum of money or a bank guarantee the value of which shall be determined by the Executive Regulations on the basis of the total debts or assets of the debtor on the date of submission of the application, or the total debts of the applicant creditor if the application is submitted by a creditor; the head of the Bankruptcy Department may decide that a lower amount be deposited as he deems appropriate in this regard.
The deposit shall be made in the manner and on the date determined by the Bankruptcy Department, and the amount deposited or the guarantee shall be used to cover the expenses and costs of the preliminary procedures for taking a decision on the application.
The head of the Bankruptcy Department may defer the deposit of the said amount or guarantee where the applicant is the debtor and does not have the liquidity necessary for the deposit on the date of submission of the application, or where the preliminary procedures will not require any costs.
The Executive Regulations shall set out the court fees payable on applications, actions, grievances and appeals submitted pursuant to this Law, and the person liable to pay them.

Article 24

The Bankruptcy Department shall notify the Bankruptcy Committee of applications for the opening of proceedings and their attachments, and of every decision and action taken thereon, within ten days from the date of submission of those applications to the Bankruptcy Department or of the taking of the decision or action.

Article 25

The Bankruptcy Committee shall, within ten days from the date of its notification of the application, unless the Bankruptcy Judge sets a shorter or longer period for it, assess the debtor’s situation in respect of the indebtedness subject to its supervision, and submit a report thereon to the Bankruptcy Department covering the following matters:
1- Whether or not preventive settlement or restructuring is possible.
2- Whether or not the debtor’s assets are sufficient to cover the costs of restructuring.
3- Whether or not precautionary measures should be taken urgently, and the justification for this.
4- Whether the debtor is able to manage its business and assets itself, or whether its interest and the interest of the creditors require that the management of the debtor’s business and assets be entrusted to a Trustee.
5- The name of the Trustee proposed to be appointed for the restructuring or the bankruptcy, and his fees.

Section Two – Determination of Applications

Article 26

The Bankruptcy Department shall notify the debtor of the application within ten days from the date of its submission if it has been submitted by another person, and the debtor shall submit its response to the application within ten days from the date of its notification, and shall submit all the information, data and documents set out in Article (20) of this Law, unless it requests the Bankruptcy Judge to exempt it from submitting the data, documents and information because the conditions for the admissibility of the application are not met. If the Bankruptcy Judge assigns the debtor to submit the said data, information and documents, it shall submit them within the time limit set by the Bankruptcy Judge.
The Bankruptcy Department shall also, within the period referred to in the first paragraph, notify the creditors whose details are included in the application, and any of them may respond to the application within ten days from the date of its notification.

Article 27

Except in cases where the application for the opening of proceedings is submitted by the debtor, the applicant may withdraw the application at any time before the issuance of the Bankruptcy Judge’s decision ruling on it or the taking of any precautionary measures in respect of it.
The Bankruptcy Judge shall issue his decision dismissing the application, unless any other person who may submit an application in accordance with this Law has submitted another application or has submitted a memorandum in response to the application in which it expressed its wish to proceed with the proceedings.

Article 28

The Bankruptcy Judge may summon any person who holds information relevant to the application.
He may order the joinder of any natural or legal person to the proceedings provided for in this Law, on terms that provide appropriate and adequate protection for the creditors, if the assets of that person are intermingled with the assets of the debtor in a manner that is difficult to separate, or if the Bankruptcy Judge considers that it would not be practical or cost-effective to open separate proceedings in respect of such persons.

Article 29

The Bankruptcy Judge shall decide on the application, within ten days from the date of expiry of the periods set for responding to it, by issuing his decision on the opening of the proceedings for preventive settlement, restructuring or declaration of bankruptcy, and shall specify in his decision a provisional date of cessation of payments.
If the date on which the debtor ceased to pay is not specified in the decision on the opening of the proceedings, the date of issuance of the decision on the opening of the proceedings shall be deemed the provisional date of cessation of payments.
If the decision on the opening of the proceedings is issued after the death of the debtor or after its retirement from trade and the date of cessation of payments is not specified, the date of death or of retirement from trade shall be deemed the provisional date of cessation of payments.

Article 30

The Bankruptcy Judge may, on his own initiative or at the request of the debtor, a creditor, the Trustee or any other interested party, amend the provisional date of cessation of payments until the date of approval of the list of debts; after the expiry of this time limit, the date specified for cessation of payments shall become final.
In all cases, the date of cessation of payments may not be carried back to more than two years prior to the date of issuance of the decision on the opening of the proceedings.

Article 31

The Bankruptcy Judge shall issue his decision declaring the application inadmissible if the documents and data provided for in Article (20) of this Law are not submitted, or if they are submitted incomplete without justification, unless he decides to accept the application on such terms as he considers appropriate.
He shall also issue his decision rejecting the application if its conditions are not met or if it becomes apparent to him that it was intended solely to harm the debtor; in this case the debtor and any person who has suffered damage from the application may claim compensation for the damage sustained, and the liability action shall be brought before the Bankruptcy Court.

Article 32

The Bankruptcy Judge may, upon an application submitted to him by the Regulatory Authority or by any interested party, decide to take any of the precautionary measures, including placing seals on the debtor’s place of business, appointing an interim Trustee to manage its assets, imposing restrictions on it in disposing of its assets, or prohibiting it and any of the members of its board of directors or its managers from travelling for a specified period or until a specified event occurs.
The Bankruptcy Judge may, upon an application submitted to him by the debtor, issue his decision on a stay of claims.

Publicity of the Decision

Article 33

The Bankruptcy Department shall, within ten days from the date of issuance of the Bankruptcy Judge’s decision on the opening of the proceedings, or on their rejection or inadmissibility, publish the decision, make an announcement of it, notify the persons concerned of it, and make a disclosure on Boursa Kuwait if the debtor is listed on it, and shall assign the debtor to disclose it on its website, unless the Bankruptcy Judge decides that any one of these methods or other methods shall suffice.
The Bankruptcy Judge may decide that the decision be announced in a daily newspaper published in a foreign State if a large proportion of the debtor’s creditors, assets or business are in that State, or for any other reason the Bankruptcy Judge sees fit.
In all cases, the decision on the opening of the proceedings shall be registered within the time limit set out in this Article.

Chapter Three – Appointment of the Trustee, the Supervisor and the Inspector

The Trustee

Article 34

If the Bankruptcy Judge decides to accept the opening of the proceedings for restructuring or declaration of bankruptcy, he shall appoint in the same decision the Trustee nominated by the Bankruptcy Committee, whose fees it has assessed in accordance with the provisions of this Law.
The Bankruptcy Judge may, on a proposal from the Bankruptcy Committee, appoint one or more Trustees from among persons other than those licensed by the Authority or registered with it, where this is in the interest of the debtor and the creditors.

Article 35

The Bankruptcy Judge may, on his own initiative or at the request of the debtor or the Bankruptcy Committee, assign the Bankruptcy Committee to nominate more than one Trustee and determine their fees, and shall issue his decision appointing them and approving their fees.
If there are several Trustees, they shall act jointly and the Trustees shall be jointly liable for their acts; they may delegate one another, but they may not delegate third parties except with the permission of the Bankruptcy Judge, and the Trustee and his delegate shall be jointly liable. The Bankruptcy Judge may divide the work among the Trustees or entrust one of them with a specific task, in which case the Trustee shall be liable only for the work assigned to him.

Article 36

In all cases in which a decision appointing a Trustee is issued after the approval of the list of creditors, or the Bankruptcy Judge issues a decision replacing the Trustee or appointing a new Trustee, the Bankruptcy Committee shall, even if the indebtedness is not subject to its supervision, within ten days from the date of issuance of that decision, invite all the creditors, including creditors holding secured debts, to nominate a Trustee and assess his fees. The Bankruptcy Committee may draw up a list of three candidates, or fewer or more, from which the selection is to be made; the chairman of the Bankruptcy Committee or whomever he designates shall chair this meeting, and the candidate shall be selected with the approval of the required majority.
If the creditors’ committees approve the nomination of a Trustee in the foregoing manner and assess his fees, the Bankruptcy Committee shall notify the Bankruptcy Department thereof within ten days from the creditors’ meeting, and the Bankruptcy Judge shall issue his decision appointing the Trustee within ten days from the date of expiry of the period set out in this paragraph.

Article 37

If a legal person is appointed as Trustee, it shall name one or more representatives to perform the duties of the Trustee, and the Trustee shall be liable for its representative; in all cases, the Trustee’s representative shall be a holder of a position required to be registered with the Authority.

Article 38

A Trustee appointed in accordance with the provisions of this Law may submit to the Bankruptcy Department any application for a decision that would assist him in performing his task as required, including, for example, an application for the appointment or secondment of one or more Trustees to assist him in any of the matters within his competence.

Article 39

The following persons may not be appointed as Trustee:
1- Any of the creditors.
2- A party related to the debtor.
3- Any person against whom a final judgment has been issued convicting him of a felony or of a misdemeanour involving dishonour or breach of trust, or of one of the offences provided for in this Law, or of any misdemeanour relating to fraud in commercial transactions or prejudicial to the national economy, unless he has been rehabilitated.

Duties of the Trustee

Article 40

The Trustee shall carry out his duties under the supervision of the Bankruptcy Department, and shall pursue the proceedings expeditiously and ensure that he takes all measures that provide protection for the interests of the debtor and the creditors.

Article 41

Where the Trustee is entrusted with the management of the debtor’s assets and business, the Trustee shall preserve such assets and shall act on behalf of the debtor in all dispositions required for the management of his assets and business.
If the debtor is a company, the Trustee shall have the same powers as are vested by the Company Contract in the Board of Directors, the Chairman of the Board, the Chief Executive Officer and the Manager of the company.
If certain acts of management or certain dispositions relating to the company require the approval of the partners’ meeting or of the ordinary or extraordinary general assembly of the company, the Bankruptcy Committee shall take their place in granting such approval.

Article 42

In the cases referred to in the preceding Article, the Trustee may, with the permission of the Bankruptcy Judge issued after hearing the statements of the debtor or notifying him, compromise or accept arbitration in any dispute relating to the debtor’s assets or business, waive a right of the debtor, and acknowledge a right of third parties.

Article 43

Immediately upon his appointment to manage the debtor’s assets and business, the Trustee shall receive, examine and retain the debtor’s correspondence relating to his business, and shall enable the debtor to examine it and shall hand over to him any correspondence of a personal nature or subject to the rules of professional secrecy that does not relate to the proceedings.

Article 44

The Trustee shall deposit any amount he receives within the proceedings in a special account at the bank designated by the Bankruptcy Judge within a period not exceeding ten days from the date of its receipt, and shall submit to the Bankruptcy Department a statement of account of such amounts within ten days from the date of deposit or within any other period determined by the Bankruptcy Judge.
If the Trustee delays, without acceptable justification, the deposit of any amounts he has received for the purpose of deposit, the Bankruptcy Judge may oblige him to pay a late-payment penalty at the rate of 7% per annum of the value of the amounts not deposited; such penalty shall be deposited in the account referred to in the preceding paragraph and shall form part of the general security of the creditors.
In the case referred to in the preceding paragraph, the Bankruptcy Judge may replace the Trustee.

Article 45

The Trustee shall record all acts relating to the management of the debtor’s assets and business in the books and registers kept for that purpose, and the recording may be electronic.
The Bankruptcy Committee, the representatives of the Creditors’ Committees, the creditors – where no Creditors’ Committee has been formed – and the debtor may examine such books and registers, and may also request to be provided with copies of the documents available to the Trustee where they relate to the debtor’s assets or business, or to be provided with data or information on the contents of the said books and registers.
If the Trustee refuses, any interested party may request the Bankruptcy Judge to instruct the Trustee to provide him with the documents or to enable him to examine them, and the Bankruptcy Judge shall issue his decision on the request within ten days from the date of its submission.

Article 46

The debtor and the Bankruptcy Committee, where the indebtedness is subject to its supervision, may object before the Bankruptcy Judge to the acts of the Trustee before their completion; the objection shall stay the performance of the act if it is submitted by the Bankruptcy Committee.
The Bankruptcy Judge shall issue his decision on the objection within ten days from the date of its submission.

Article 47

The Trustee shall submit to the Bankruptcy Department and the Bankruptcy Committee, as the case may be, a monthly report, or a report at any other time determined by the Bankruptcy Judge, on the status of the management of the debtor’s assets and business and the progress of the restructuring and declaration of bankruptcy proceedings.

Article 48

The Trustee, the debtor or any creditor may request the Bankruptcy Judge to issue a decision determining the scope of the Trustee’s powers with respect to a specific matter or matters, provided that this does not lead to the stay or disruption of the proceedings; in all cases, the Bankruptcy Judge shall have jurisdiction to issue such decisions as he deems fit concerning the Trustee’s powers.

Article 49

The Trustee shall collect the fees determined in the decision appointing him, and the necessary expenses he incurs, from the debtor’s assets known to the Bankruptcy Department; a payment on account of such fees and expenses may be disbursed by a decision of the Bankruptcy Judge.

The Supervisor

Article 50

The Bankruptcy Judge may, on his own initiative or at the request of the debtor or the Bankruptcy Committee, instruct the Bankruptcy Committee to nominate one or more Supervisors – from among the persons who may perform the duties of Trustees in accordance with this Law – and to determine their fees, and he shall issue his decision appointing them and approving their fees.
The Supervisor shall prepare a report on the progress of the proceedings if so requested by the Bankruptcy Judge, without intervening in the proceedings, and the provisions of Articles (37, 39, 49) of this Law shall apply to the Supervisor.

The Inspector

Article 51

The Bankruptcy Judge may, upon a reasoned request submitted by the Bankruptcy Committee, a Regulatory Authority, any of the creditors, the Supervisor or the Trustee, or on his own initiative, appoint an Inspector from among the persons who may perform the work of the Trustee or from others, and instruct him to inspect all of the debtor’s business, assets or dispositions, or to inspect a specific fact or facts, where the request for the appointment of the Inspector relates to a debtor in respect of whose debts an application to open proceedings has been submitted in accordance with the provisions of this Law; where a Trustee or a Supervisor has been appointed, the Trustee or the Supervisor, as the case may be, shall undertake the task of inspection.
The Bankruptcy Judge shall decide on the request within ten days from the date of its submission to the Bankruptcy Department, and the decision appointing the Inspector shall specify the task entrusted to him, his competences, his powers and his fees if he is not one of those appointed as Trustee or Supervisor, in which case the provisions of Articles (34, 35) of this Law shall apply to him; the Bankruptcy Judge may authorise the Inspector to seek the assistance of whomever he deems fit to accomplish the task entrusted to him.
Article (49) of this Law shall apply to the Inspector’s fees, and the Bankruptcy Judge may require the creditor who requested the inspection to pay such fees in advance, provided that he recovers them from the debtor’s assets if the Inspector concludes that the facts on which the creditor relied in the inspection request are true.

Article 52

In carrying out the task assigned to him, the Inspector may request to hear the testimony of any person without taking an oath, and may also request any information or documents from the debtor, any of the creditors, the units subject to the Central Bank, the persons licensed by the Authority, the Regulatory Authorities, or any other governmental or non-governmental entity.
If the person or entity referred to above considers that such testimony, information or documents are not related to the task assigned to the Inspector, he shall, within ten days from the date of his notification of the Inspector’s request, submit a request to the Bankruptcy Judge to exempt him from all or part of what the Inspector has requested; the Bankruptcy Judge shall issue his decision on the request within ten days from the date of its submission, and his decision shall be final.

Article 53

The Inspector shall accomplish the task he is assigned to carry out and shall submit a report to the Bankruptcy Department setting out how it was carried out and the findings he reached, within the time limits specified in the decision assigning him; the Bankruptcy Judge may extend the period for carrying out the task at the request of the Inspector.

Article 54

The Bankruptcy Judge may at any time – after obtaining the opinion of the Bankruptcy Committee if the proceedings relate to debts subject to the Committee’s supervision – decide to replace the Trustee, the Supervisor or the Inspector; the debtor and any creditor may also request the Bankruptcy Judge to replace any of them if he proves that the continuation of his appointment is detrimental to the interests of the creditors or the debtor. The request shall not stay the proceedings, and the Bankruptcy Judge shall decide on the request within ten days.
The Trustee, Supervisor or Inspector whom the Bankruptcy Judge decides to replace shall cooperate to the extent necessary to enable his replacement to assume his duties, and this provision shall apply to the managers of the bankruptcy estate appointed before the entry into force of this Law.
The Trustee, Supervisor or Inspector may request the Bankruptcy Judge to relieve him of his duties, and the Bankruptcy Judge may accept such request and appoint a replacement for him, and may determine fees for the Trustee or Inspector whose request has been accepted in consideration of the services he has rendered.

Chapter Four – Notifications

Article 55

Notifications made in accordance with the provisions of this Law through the Bankruptcy Department, the Bankruptcy Committee, the Trustee, the Inspector, the debtor, the creditors, the representative of the Creditors’ Committee or the representatives of the classes of creditors shall produce their effects if made by e-mail or by any other method agreed upon or determined by the Bankruptcy Judge, the Bankruptcy Department, the Bankruptcy Court or the Court of Appeal.
Except for notifications addressed by the debtor, the representative of the Creditors’ Committee and the representatives of the classes of creditors, notification may be made by way of announcement or publication, and the provisions set out in the aforementioned Law No. 20 of 2014 shall apply to notification by e-mail.

Article 56

The Bankruptcy Department, the Bankruptcy Committee, the Trustee, the Supervisor, the Inspector, the debtor, the representative of the Creditors’ Committee and the representatives of the classes of creditors shall each keep the notifications made by e-mail, in the form in which they were sent, in a paper or electronic register designated for that purpose.

Article 57

By way of exception to the rules on the service of judicial documents provided for in the Civil and Commercial Procedures Law, and without prejudice to the cases in which notice is given by way of notification as set out in this Law, documents relating to the actions, requests and appeals set out in this Law may be served by e-mail, registered mail or any other means approved by the Bankruptcy Court or the Court of Appeal.
Notifications, and the submission of documents, information and data, may also be made by making them available in an electronic data room, to which interested parties shall have access via the internet by means of a username and password delivered to the person to whom the notification is to be addressed or who is to be provided with the documents, information and data, in the manner set out in the Executive Regulations of the Law.

Part Three – Preventive Settlement

Chapter One – Application to Open Preventive Settlement Proceedings

Article 58

Subject to the provisions established by this Law regarding the application to open proceedings, the debtor may submit an application to open preventive settlement proceedings in accordance with the following:
1- If he has ceased to pay, or if there are reasons that cause him to expect or fear being unable to pay all or some of his debts when they fall due, as set out in the Executive Regulations.
2- If he is in a state of financial deficit, or if there are reasons that cause him to expect or fear being in a state of financial deficit when some or all of his debts fall due, as set out in the Executive Regulations.
3- That the debtor’s business is viable.
4- If his creditors have previously rejected a preventive settlement proposal, or the Bankruptcy Judge has previously issued a decision refusing to ratify a preventive settlement proposal, even if this concerned debts of the debtor other than those in respect of which the application is submitted, the application may not be submitted until three months have elapsed from the date of the creditors’ meeting or of the decision of the Bankruptcy Judge referred to.
5- If his creditors have previously rejected a restructuring plan, or the Bankruptcy Judge has previously issued a decision refusing to ratify a restructuring plan, even if this concerned debts of the debtor other than those in respect of which the application is submitted, the application may not be submitted until three months have elapsed from the date of the creditors’ meeting or of the decision of the Bankruptcy Judge referred to.
6- If a decision of the Bankruptcy Judge or a judgment of the Bankruptcy Court has previously been issued terminating the preventive settlement proceedings or terminating the restructuring proceedings, even if this concerned debts of the debtor other than those in respect of which the application is submitted, the application may not be submitted until three months have elapsed from the date of issuance of the decision of the Bankruptcy Judge or the judgment of the Court referred to.
7- If a final judgment declaring the debtor bankrupt has previously been issued, the application may not be submitted until three years have elapsed from the end of the bankruptcy estate.
8- If the indebtedness in respect of which the application is submitted is still subject to any proceedings under this Law in implementation of a decision issued to open proceedings under this Law, the application may not be submitted.
By way of exception to the provisions of Clauses (4, 5, 6, 7, 8) of this Article, the debtor may submit the application at any time if he attaches thereto evidence of the prior approval of the required majority for the preventive settlement proposal in respect of which the application is submitted.

Article 59

Subject to the provision of Article (20) of this Law, the debtor shall attach to the application to open preventive settlement proceedings the following:
1- The data, information and documents evidencing the fulfilment of the conditions required for submitting an application to open preventive settlement proceedings.
2- A brief explanation of the preventive settlement proposal, setting out its terms, the manner of its implementation, the guarantees for its implementation, if any, and the timetable for implementation.
3- A summary of the contracts and agreements required to be signed between the debtor and the creditors to implement the preventive settlement proposal.
4- The classification of creditors.
5- Where a Creditors’ Committee is formed according to the classification of creditors, the debtor shall attach a list of the members of that Committee, stating the name of the representative of each class of creditors, their e-mail and postal addresses and their telephone numbers, together with the documents evidencing the appointment of such members and representatives and the limits of their authorisation by the creditors.
6- The procedures for convening the creditors’ meeting to discuss the preventive settlement proposal, the manner of voting on it, and those entitled to vote.

Chapter Two – Effect of the Decision to Open Preventive Settlement Proceedings

Management of the Debtor’s Business and Assets

Article 60

After the issuance of the decision to open preventive settlement proceedings, the debtor shall remain in charge of managing his business and assets, and may carry out all dispositions required for the conduct of his commercial activity, in a manner that does not harm the interests of the creditors, unless the Bankruptcy Judge decides otherwise.
The debtor may not carry out any dispositions falling outside the scope of his ordinary business except after obtaining the approval of the Bankruptcy Judge.

Stay of Claims

Article 61

The issuance of the decision to open preventive settlement proceedings shall result in a stay of claims for the three months following the date of issuance of the decision; the Bankruptcy Judge may, at the request of the debtor, extend the period of the stay of claims once or more, provided that each extension does not exceed one month, and in all cases the period of the stay of claims shall not exceed six months.
The Bankruptcy Department shall, at the request of the debtor, provide him with a certificate of the stay of claims and the period of the stay.

Article 62

During the period of the stay of claims, the debtor shall exercise the necessary diligence to persuade his creditors to vote in favour of the preventive settlement proposal, and shall also provide the creditors with all documents, information and data enabling them to take a decision on the preventive settlement proposal, and respond to the enquiries submitted to him by the creditors.

Article 63

The period of the stay of claims shall end upon the occurrence of any of the following cases:
1- The ratification by the Bankruptcy Judge of the preventive settlement proposal.
2- The issuance of a decision by the Bankruptcy Judge terminating the preventive settlement proceedings.
3- The expiry of the period provided for in Article (61).

Contracts

Article 64

The issuance of the decision to open preventive settlement proceedings shall not cause the debts owed by the debtor to fall due, nor shall it stop the accrual of interest thereon, and any condition contained in the contracts concluded with the debtor providing otherwise shall be deemed never to have existed.

Article 65

The issuance of the decision to open preventive settlement proceedings shall not result in the suspension or termination of the debtor’s current contracts, including lease contracts, even if the contract provides otherwise, and the party contracting with the debtor shall continue to perform its contractual obligations as long as the debtor has not ceased to perform his obligations arising after the date of issuance of the decision to open proceedings.
Except for the contracts covered by the preventive settlement proceedings, and in the event that the debtor breaches any of his contractual obligations, and by way of exception to the stay of claims, the Bankruptcy Court may – at the request of the contracting party – rule to rescind the contract.

Article 66

The Bankruptcy Court may, at the request of the debtor, rule to rescind any contract in force to which the debtor is a party if this is necessary to enable him to carry on his business or serves the interest of the creditors, provided that the rescission does not cause serious harm to the interests of the party contracting with the debtor, unless the Court decides to award the contracting party fair compensation, in which case the contracting party shall be entitled to participate in the preventive settlement proceedings as an ordinary creditor for the compensation resulting from the rescission.

New Financing

Article 67

The debtor may borrow or obtain banking facilities – of whatever type – with or without security, in accordance with what is stated in the application to open proceedings or in any request submitted to the Bankruptcy Department after the submission of the application to open proceedings and before a decision is issued thereon.
He may also borrow or obtain banking facilities after the issuance of the decision to open proceedings if this is provided for in the proposal or has been approved by the required majority, unless the Bankruptcy Judge decides otherwise, and he shall notify the lender or the entity granting the banking facilities that he is subject to preventive settlement proceedings in accordance with this Law.

Article 68

The Bankruptcy Judge may, at the request of the debtor – and after obtaining the opinion of the Bankruptcy Committee, where the indebtedness is subject to its supervision – authorise the debtor subject to preventive settlement proceedings to obtain new financing in which the creditor shall have priority over any existing ordinary debt owed by the debtor on the date of the decision to open proceedings, where such financing is necessary for the debtor’s business and does not harm the common interest of the creditors or the preventive settlement proceedings.

Article 69

The new financing may be secured by creating a mortgage over any of the debtor’s unmortgaged or mortgaged assets; in the latter case, the mortgage shall rank after the mortgage or mortgages existing over the assets to be mortgaged.
The new financing may also be secured by creating a mortgage over any of the debtor’s mortgaged assets ranking equally with, or ahead of, any existing mortgage over the assets to be mortgaged, in which case the approval of the prior-ranking secured creditors [and of] the Creditors’ Committee shall be required.
* Completed from the context.

Article 70

Within ten days of the issuance of the decision to open preventive settlement proceedings, the debtor shall coordinate with the creditors to form the Creditors’ Committee from representatives of the classes of his debts; the Committee shall be chaired and represented by the creditor holding the largest amount of the debtor’s debts, and each class of the debtor’s debts shall be represented by the creditor holding the largest amount of the debtor’s debts in that class, unless the required majority approves, or the creditors holding the majority of a class of debts approve, the appointment of representatives of the classes of the debtor’s debts and of the Creditors’ Committee from among creditors other than those holding the largest debts or from among non-creditors.
With the approval of the required majority of creditors or the approval of the creditors holding the majority of a class of debts, the representative of the Committee may be relieved of his duties and a replacement appointed. If the latter does not obtain the said approvals, the representative shall be the creditor holding the largest debts, then the next in descending order, and so on.

Article 71

Within ten days of the expiry of the period set out in the preceding Article, the debtor shall deposit with the Bankruptcy Department a list of the classes of debts, stating the type, amount and classification of each debt, the name of the creditor and of his representative and his postal and e-mail addresses, together with the formation of the Creditors’ Committee, stating the name of the chairman of the Committee and of its members, the class of debts represented by each member, and the member’s postal and e-mail addresses.
The Bankruptcy Judge shall issue a decision approving the formation of the Committee within ten days from the date of depositing such formation, and the Bankruptcy Department shall notify the debtor, the creditors, the Supervisor and the Bankruptcy Committee – where the indebtedness is subject to its supervision – of that decision.

Article 72

Within ten days from the date of its notification of the decision forming the Committee, the Creditors’ Committee shall determine the matters in which it delegates the chairman of the Committee, and shall notify the debtor, the Bankruptcy Department and the Bankruptcy Committee – as the case may be – thereof.
As from the date of such notification, the creditors shall be notified, through the representative of the creditors, of all matters of which the Law requires them to be notified.
The representative of the Committee shall notify its members of the notifications he has received no later than the working day following the date of their receipt, and the same provision shall apply to the representative of each class of debts vis-à-vis the creditors of that class.

Chapter Three – Approval, Ratification and Implementation of the Preventive Settlement Proposal

Section One – Approval of the Preventive Settlement Proposal

Article 73

The preventive settlement proposal shall include the following:
1. The debtor’s plan for carrying on his activity.
2. The classification of the classes of creditors, the amounts due to each of them, and the security provided against each indebtedness and its value.
3. Confirmation of the viability of the debtor’s business.
4. The debtor’s activities that are to be discontinued or terminated.
5. The terms and conditions for the settlement of any obligations.
6. Any guarantees for the proper implementation of the proposal required to be provided by the debtor, if any.
7. Any offer to purchase all or part of the debtor’s assets as a going concern or in parts, if any.
8. Grace periods and payment discounts.
9. The extent to which the debt may be converted into quotas or shares in the capital of any company or project.
10. The extent to which any security may be consolidated, created, released, sold or replaced if this is necessary for the implementation of the preventive settlement proposal.
11. A proposed period or periods for the full repayment of the debt.
12. The extent of the debtor’s need for financing during the period of implementation of the proposal, and the purposes and security of such financing.
13. The mechanism by which the creditors and the Supervisor – if appointed – will monitor the implementation of the proposal, the reports to be submitted on its implementation, and the dates of submission and content of such reports.
14. Any other matters that the debtor considers useful for the implementation of the preventive settlement proposal and deems fit to include in the proposal.
15. The rights that the creditors will obtain under the preventive settlement proposal compared with the rights that they could obtain in the event of a declaration of bankruptcy.

Article 74

The debtor shall deposit a copy of the preventive settlement proposal with the Bankruptcy Department, accompanied by a summary of the proposal, within three months from the date of issuance of the decision to open proceedings; the Bankruptcy Judge may extend this period for a similar period or longer at the request of the debtor after hearing the Bankruptcy Committee, and in all cases the approval of the required majority shall be required for any extension that would cause the period for depositing the preventive settlement proposal to exceed six months.
Within the time limit referred to in the preceding paragraph, the debtor shall notify the Bankruptcy Committee – where the indebtedness is subject to its supervision – the representative of the Creditors’ Committee and the members of the Committee of the proposal and its attachments, and the representative of the Creditors’ Committee and each of its members shall notify the class of creditors he represents of the proposal and its attachments no later than the end of the working day following the date of his receipt of the plan and its attachments.
If the preventive settlement proposal is not deposited within the time limit set out in this Article, the Bankruptcy Judge may, upon a request submitted to him by any of the creditors or by the Bankruptcy Committee where the indebtedness is subject to its supervision, terminate the preventive settlement proceedings, and the Judge shall issue his decision within ten days from the date of submission of the request.

Article 75

The proposal may be based on the debtor relinquishing some of his assets in return for the settlement of all or some of his debts, and consequently the payment of all of the debtor’s debts in kind or in cash, or the payment of part of them in kind or in cash and the waiver or rescheduling of the remainder, so that the debtor is discharged from all or part of the debt; the approval of the extraordinary general assembly of the debtor joint-stock company, or of the body acting in place of the extraordinary general assembly in other companies, shall be required for the proposal.

Article 76

The debtor shall invite the creditors to approve the preventive settlement proposal by a notification including the date and place of the meeting, in accordance with the procedures set out in the preventive settlement proposal, provided that the meeting is held at least ten days after the date on which the invitation to the meeting is sent and within a period not exceeding one month from the date of notifying the representative of the Creditors’ Committee and the members of the Committee of the plan and its attachments.
Within the time limit set out in the preceding paragraph, the debtor shall also send the invitation to the Bankruptcy Committee, where the indebtedness is subject to its supervision, and to the relevant Regulatory Authority if the debtor is subject to its supervision; the debtor shall chair the meeting, and with the approval of the required majority a person may be chosen from among the creditors or others to chair the meeting.
If the debtor refuses to hold the meeting as set out in the first paragraph of this Article, the Bankruptcy Judge shall, upon a request submitted to him by the Trustee or any of the creditors, instruct the Bankruptcy Committee, even if the indebtedness is not subject to its supervision, to convene the creditors’ meeting, chaired by whomever it delegates from among its members, and to carry out all the acts that the debtor is required to carry out under the following Articles of this Section and the Section on the ratification of the preventive settlement proposal.

Article 77

The right to vote on the preventive settlement proposal shall be limited to the creditors affected by the proposal, and no party related to the debtor may participate in the vote.
Nor may creditors holding debts secured by a mortgage or a privilege be considered unaffected creditors merely because they retain security for their debts.
The Bankruptcy Judge shall decide on any dispute arising over a creditor’s entitlement to vote and over who shall chair the meeting, by a decision issued within ten days from the date of submission of a request to that effect to the Bankruptcy Department.

Article 78

The debtor shall provide a full explanation of the terms of the preventive settlement proposal during the meetings held to discuss the proposal and any amendments thereto; any of the creditors, the Creditors’ Committee or its representative, or the Bankruptcy Committee – where the indebtedness is subject to its supervision – may attend the meetings and express an opinion on the settlement proposal or its amendments.
He shall also invite the creditors affected by the proposed amendments to further meetings to consider and vote on such amendments.

Article 79

The preventive settlement proposal shall be deemed to have obtained the approval of the creditors if it is approved by the required majority; if the proposal does not obtain the approval of such majority at the first meeting of the creditors, the meeting shall be adjourned for ten days to a second meeting to be held to vote on the proposal.
If the proposal does not obtain the approval of the required majority at the adjourned meeting, this shall be deemed a rejection of the preventive settlement proposal.

Article 80

Minutes shall be drawn up of the proceedings of the meeting held to vote on the preventive settlement proposal, to be signed by the debtor, the creditors present who are entitled to vote, and the representative of the Creditors’ Committee; if any creditor refuses to sign, his name and the reason for his refusal shall be stated in the minutes.
If the meeting is held by means of modern communication, the Supervisor shall attend; if a Supervisor has not been appointed, a representative of the Creditors’ Committee or a representative of the Bankruptcy Committee, where the indebtedness is subject to its supervision, shall attend, and the signature of the minutes by the debtor and the Supervisor, or by the debtor and the representative of the Creditors’ Committee, or by the debtor and the representative of the Bankruptcy Committee, as the case may be, shall suffice; the Executive Regulations shall specify the conditions and rules governing such a meeting.

Article 81

Within ten days from the date of approval or rejection of the preventive settlement proposal, the debtor shall notify the Bankruptcy Department, the Supervisor, the Bankruptcy Committee and the relevant Regulatory Authority – as the case may be – thereof, attaching the approved or rejected plan, the minutes of the meetings at which the vote took place, the documents evidencing the notifications sent for attendance at the meetings, the evidence of attendance and the evidence of voting; if the plan has been approved, the notification shall include a request for the ratification of the plan.
The representative of the Creditors’ Committee, the representative of any class of creditors, or the creditors holding 25% of the debtor’s debts may make such notification if the debtor fails to do so within the period set out in the preceding paragraph.
Within ten days from the date of its receipt of the notification referred to in the preceding paragraph, the Bankruptcy Department shall notify all the creditors thereof and of all its attachments.
If the proposal is rejected, the Bankruptcy Judge shall, within ten days from the date of notification of the Bankruptcy Department, issue a decision terminating the preventive settlement proceedings and shelving the application, and may, at the request of the debtor, the Regulatory Authority or the creditors, decide to open restructuring or declaration of bankruptcy proceedings, as he deems appropriate to the debtor’s situation and the interest of the creditors.

Section Two – Ratification of the Preventive Settlement Proposal

Article 82

Within ten days from the date of receipt by the Bankruptcy Department of the notification of the creditors’ approval of the preventive settlement proposal and its attachments, the Bankruptcy Judge shall ratify the proposal after verifying that the following two conditions are met:
1. That the proposal has obtained the approval of the required majority.
2. That the proposal meets the standards of fairness to the affected creditors set out in the following Article.

Article 83

The preventive settlement proposal shall be deemed to meet the standards of fairness if the following are met:
1. The creditors have obtained adequate information and sufficient time to study the preventive settlement proposal.
2. There has been no breach of the procedures for the creditors’ meeting and voting set out in the preventive settlement proposal submitted to the Bankruptcy Department before the opening of the preventive settlement proceedings.
3. Regard has been had to the existing rights of the creditors – in particular the rights of creditors holding mortgage and privilege rights – and to equality between holders of rights of equal standing, in particular with regard to the sharing of losses and the distribution of new rights.

Article 84

The Bankruptcy Judge shall issue a decision refusing to ratify the proposal or suspending its ratification upon the occurrence of any of the following cases:
1. If the procedures for convening the meeting or the voting procedures thereat are vitiated by nullity.
2. If the approval of the required majority for the proposal has not been obtained.
3. If the proposal does not meet the standards of fairness in accordance with the preceding Article.
If ratification of the proposal is suspended, the Bankruptcy Judge shall specify the amendments required to be made to it or the procedure required to be completed, and shall set a time limit for the debtor to obtain the approval of the required majority for the amended proposal and to resubmit it to the Bankruptcy Department for ratification; if the amended proposal obtains the approval of the required majority, the Bankruptcy Judge shall ratify it, and if the creditors do not approve the amended proposal, the Bankruptcy Judge shall issue a decision refusing ratification.

Article 85

Any of the affected creditors who did not vote in favour of the preventive settlement proposal may file a grievance with the Bankruptcy Department against the creditors’ decision approving the proposal for such settlement within ten days from the date of the creditors’ meeting at which the approval was decided, if the creditor attended that meeting and rejected the proposal or had been notified of the date of that meeting and did not attend with an acceptable excuse, or from the date on which the creditor is notified by the Bankruptcy Department of the creditors’ approval of the preventive settlement proposal if he did not attend the creditors’ meeting because he had not been notified of its date.
The Bankruptcy Judge shall decide on the grievance in the same decision ratifying the preventive settlement proposal; if the grievance is accepted, the Bankruptcy Judge may suspend the ratification of the proposal to correct the void procedure or to amend the proposal, or may refuse to ratify it.
If ratification is refused, the Bankruptcy Judge shall, within ten days from the date of notification of the Bankruptcy Department, issue a decision terminating the preventive settlement proceedings and shelving the application, and may, at the request of the debtor, the Regulatory Authority or the creditors, decide to open restructuring or declaration of bankruptcy proceedings, as he deems appropriate to the debtor’s situation and the interest of the creditors.

Article 86

The preventive settlement proposal ratified by the Bankruptcy Judge shall be binding on all the creditors covered by it, including the creditors who rejected the proposal and those who did not attend the meeting held to vote on the proposal.
The Bankruptcy Department shall carry out the announcement, publication, notification, disclosure and registration, in accordance with Article (33) of this Law, of every decision issued ratifying the preventive settlement proposal, rejecting the proposal, suspending ratification, terminating the proceedings, or opening restructuring or declaration of bankruptcy proceedings, within ten days from the date of issuance of the decision; the Bankruptcy Judge may confine himself to registering the decision in the Bankruptcy Register and the Commercial Register.

Section Three – Implementation of the Preventive Settlement Proposal

Article 87

The debtor shall implement the preventive settlement proposal as approved by the creditors and ratified by the Bankruptcy Judge, and shall, within ten days from the date of completion of the implementation of the settlement proposal, notify the Bankruptcy Department thereof, attaching to the notification a statement of the debts that have been settled and the manner of settlement, together with the document evidencing the settlement; the Bankruptcy Judge shall issue a decision on the completion of the implementation of the settlement proposal and the termination of the preventive settlement proceedings within ten days from the date of receipt of the notification by the Bankruptcy Department, and the second paragraph of Article (86) of this Law shall apply to the decision; the Bankruptcy Judge may request the opinion of the Supervisor, if appointed, on the completion of the implementation of the settlement before issuing the said decision, and may also request the opinion of the Bankruptcy Committee on the completion of the implementation of the settlement, even if the indebtedness is not subject to its supervision, before issuing the said decision.
Creditors who dispute the accuracy of the debtor’s notification concerning the settlement of their debts may file a grievance against the decision referred to in the preceding paragraph; if the grievance is accepted, the debtor shall implement the preventive settlement proposal in respect of the creditor whose grievance has been accepted, and the preventive settlement proposal shall be deemed not to have been implemented in respect of that creditor.

Article 88

The debtor may, at any time during the implementation of the preventive settlement proposal, invite his creditors to discuss any amendments he considers necessary to make to the proposal, and the creditors shall be notified of the proposed amendments and their justifications at least ten days before the date set for the meeting; if the required majority approves the amended proposal, he shall notify the Bankruptcy Department of that proposal, the minutes of the creditors’ meetings and the evidence of attendance and voting, and shall request its ratification, and the Bankruptcy Judge shall, within ten days from the notification of the Bankruptcy Department of the amended proposal, ratify it if it meets the standards of fairness and has obtained the approval of the required majority; otherwise, he shall refuse to ratify it or shall suspend ratification.
A grievance may be filed against the decision ratifying the amended proposal in accordance with the provisions set out in Article (85) of this Law.

Chapter Four – Termination of Preventive Settlement Proceedings before Implementation

Article 89

The Bankruptcy Court may, upon a request submitted to it by any of the affected creditors during the period following the decision ratifying the preventive settlement proposal and before the completion of the implementation of the proposal, rule to terminate the preventive settlement proceedings upon the occurrence of any of the following cases:
1. The institution of a criminal action against the debtor for any of the offences provided for in this Law, provided that the request is submitted within the six months following the date of institution of such action, and provided also that such action has been instituted after the ratification of the preventive settlement proposal and before the completion of its implementation; otherwise, the request shall be inadmissible.
2. The issuance of a judgment convicting the debtor of any of the offences provided for in this Law after the ratification of the preventive settlement proposal and before the completion of its implementation.
3. If the debtor fails to implement the terms of the preventive settlement proposal.
4. If the debtor dies and it becomes evident that the implementation of the proposal is impossible.
5. If, after the date of ratification of the proposal, matters arise that would render the debtor’s business not viable, or that have affected the debtor’s ability to implement the settlement proposal such that the debtor is no longer expected to be able to implement that proposal in accordance with its terms.
6. If the debtor refuses to provide the information, data and documents he is required to provide.
7. If the debtor commits a serious fault in the management of his assets or business during the period following the issuance of the decision to open preventive settlement proceedings.
8. If the debtor, when submitting the application to open preventive settlement proceedings or thereafter, commits fraud or deception or provides misleading information.
The Court may, at the request of interested parties, order such precautionary measures as it deems appropriate, and such measures shall be revoked if the debtor is finally acquitted.

Article 90

The termination of the preventive settlement proceedings on the basis of Clauses (1 and 2) of the preceding Article shall result in the discharge of the guarantor from the guarantee provided for the implementation of the terms of the preventive settlement, if the acts that led to the taking of the proceedings referred to in those two Clauses were committed by the debtor before the issuance of the decision ratifying the preventive settlement proposal and had an effect on the will of the guarantor.
The termination of the preventive settlement proceedings on the basis of Clause (8) of the same Article shall also result in the discharge of the guarantor from the guarantee provided to secure the implementation of the terms of the preventive settlement.
The termination of the preventive settlement proceedings on the basis of Clauses (3) to (7) shall not result in the discharge of the guarantor.
In all cases, the said guarantor and the guarantors of the indebtedness shall be summoned to attend the hearing at which the request to terminate the proceedings is considered.

Article 91

The termination of the preventive settlement proceedings on the ground of the nullity of such proceedings shall result in the discharge of the guarantor acting in good faith who guaranteed the performance of all or some of its terms.

Article 92

The Bankruptcy Court may include in its judgment terminating the proceedings and declaring the debtor bankrupt the placing of seals on the debtor’s assets, and the Court may also include in that judgment any other precautionary measures.

Article 93

The Bankruptcy Judge may, upon an application submitted to him during the period following the decision ratifying the preventive settlement proposal and before the full implementation of the proposal, decide to terminate the preventive settlement proceedings if either of the following two cases occurs:
1- If the debtor submits an application to terminate the proceedings on the ground that the conditions for the opening of preventive settlement proceedings no longer apply to him, or that the settlement proposal cannot be implemented in accordance with the terms of the proposal.
2- If the debtor or the Regulatory Authority submits an application for the opening of restructuring proceedings or declaration of bankruptcy proceedings.
The Bankruptcy Department shall notify the creditors, the Bankruptcy Committee and the Supervisor, as the case may be, of the application within ten days from the date of its submission. The Bankruptcy Judge shall issue his decision approving or rejecting the application within ten days from the date of its submission.

Article 94

If the Bankruptcy Judge decides to terminate the preventive settlement proceedings, he may, upon an application submitted to him by the debtor, the Regulatory Authority or the creditors entitled to submit an application to open proceedings in accordance with this Law, decide to open restructuring proceedings or to open declaration of bankruptcy proceedings.
The Bankruptcy Department shall, within ten days from the date of issue of the decision, publish, announce, disclose, notify and register it in accordance with Article (33) of this Law, and the Bankruptcy Judge may confine himself to registering the decision in the Bankruptcy Register and the Commercial Register.

Article 95

Dispositions made by the debtor after the issue of the decision ratifying the preventive settlement proposal shall be enforceable against the creditors, and they may not request that such dispositions be declared unenforceable except in accordance with the rules prescribed for the action for the non-enforceability of dispositions. Such action shall not be heard after the lapse of two years from the date of termination of the proceedings, and in all cases no disposition made by the debtor in implementation of the ratified preventive settlement proposal may be challenged.

Article 96

The termination of the preventive settlement proceedings shall not oblige the creditors to return what they have received of their debts before the issue of the judgment or the termination decision, and such amounts shall be deducted from the value of their debts.

Part Four – Restructuring

Chapter One – Application to Open Restructuring Proceedings

Article 97

Subject to the provisions prescribed by this Law regarding the application for the opening of the proceedings, the debtor, the creditors and the Regulatory Authority may submit an application for the opening of restructuring proceedings in accordance with the following rules:
1- If the debtor has ceased to pay.
2- If the debtor is in a state of deficit in his financial position.
3- That the debtor’s business is viable.
4- If the debtor’s creditors have previously rejected a restructuring plan, or the Bankruptcy Judge has previously issued a decision refusing to ratify a restructuring plan, even if this concerned debts of the debtor other than those in respect of which the application is submitted, the application may not be submitted until the lapse of three months from the date of the creditors’ meeting or of the aforementioned decision of the Bankruptcy Judge.
5- If a decision of the Bankruptcy Judge or a judgment of the Bankruptcy Court terminating restructuring proceedings has previously been issued, even if this concerned debts of the debtor other than those in respect of which the application is submitted, the application may not be submitted until the lapse of three months from the date of issue of the aforementioned decision of the Bankruptcy Judge or judgment of the Court.
6- If a final judgment declaring the debtor bankrupt has previously been issued, the application may not be submitted until the lapse of three years from the date of closure of the bankruptcy estate.
7- If the indebtedness in respect of which the application is submitted is still subject to restructuring proceedings in implementation of a decision issued to open the proceedings in accordance with this Law, the application may not be submitted, and this provision shall apply to the cases provided for in Clauses (4 and 5) of this Article.
8- If the indebtedness in respect of which the application is submitted is still subject to declaration of bankruptcy proceedings in implementation of a decision issued to open the proceedings in accordance with this Law, the applicant shall base the application on the debtor’s business having become viable and shall attach to his application the evidence thereof.
By way of exception to the provisions of Clauses (4, 5, 6, 7 and 8) of this Article, the application may be submitted at any time if it is accompanied by evidence of the approval of the required majority for the restructuring plan in respect of which the application is submitted.

Article 98

Subject to the provision of Article (20) of this Law, the application for the opening of restructuring proceedings shall be accompanied by the following:
1. The data, information and documents evidencing the fulfilment of the conditions required for submitting an application for the opening of restructuring proceedings.
2. A brief explanation of the restructuring plan, setting out its terms, the manner of its implementation, the guarantees of its implementation, if any, and the implementation timetable.
3. A summary of the contracts and agreements required to be signed between the debtor and the creditors to implement the restructuring plan.
4. The classification of creditors.
5. Where the Creditors’ Committee is formed in accordance with the classification of creditors, a statement of the members of that Committee shall be attached, indicating the name of the representative of each class of creditors, their e-mail and postal addresses and their telephone numbers, together with the documents evidencing the appointment of such members and representatives and the limits of their authorisation from the creditors.
6. The procedures for calling a meeting of the creditors to discuss the restructuring plan, the manner of voting on it and those entitled to vote.
7. Where preliminary approval of the restructuring plan has been given by some of the creditors, a statement shall be submitted of the names of such creditors according to their classification, the amount of the debtor’s debts owed to them, the securities of such debts and their percentage of the debtor’s total debts.
Applications submitted by the Regulatory Authority shall be exempt from submitting the data, information and documents referred to in Clauses (1 and 4) of this Article.

Chapter Two – Effects of the Decision to Open Restructuring Proceedings

Section One – Management of the Debtor’s Assets and Business

Article 99

After the issue of a decision to open restructuring proceedings, the debtor shall remain in charge of managing his business and assets under the supervision of the Trustee, and he may carry out all dispositions required by his commercial activity in a manner that does not harm the interests of the creditors, unless the Bankruptcy Judge decides otherwise.
The Trustee may request the debtor, the creditors, the Bankruptcy Committee, the Bankruptcy Department, the Supervisor or the Inspector to provide him with any information or documents available to them regarding the debtor’s debts, business or assets, and the Trustee may take all measures necessary to monitor the debtor’s financial operations and to verify the soundness of the debtor’s management of his assets and business.
The Executive Regulations shall specify the acts and dispositions of which the debtor shall notify the Trustee before undertaking them, and those for which the debtor shall obtain the Trustee’s approval before carrying them out.

Article 100

If the Bankruptcy Judge has appointed an interim Trustee to manage the debtor’s business and assets, the Trustee shall cease managing the debtor’s assets and business and shall hand them over to the debtor within ten days from the date of issue of the decision to open restructuring proceedings, unless the Bankruptcy Judge decides otherwise.

Article 101

The Bankruptcy Judge may, upon a reasoned application submitted by the Trustee, one of the creditors or the Bankruptcy Committee, as the case may be, decide within ten days from the date of submission of the application to prevent the debtor, its board of directors or its managers from managing its assets and business and to entrust such management to the Trustee. In this case, the Trustee shall have all the powers of the debtor, its board of directors, its executive management and its general assembly, with respect to dispositions requiring the approval of the general assembly, unless the Bankruptcy Judge decides otherwise.
In all cases, the decision of the Bankruptcy Judge accepting or rejecting the application shall be reasoned.

Article 102

The issue of a decision to open restructuring proceedings shall result in a stay of claims with effect from the day following the date of issue of that decision until the date of ratification of the restructuring plan, and the Bankruptcy Department shall, upon the debtor’s request, provide the debtor with a certificate of the stay of such claims.

Article 103

The period of the stay of claims shall end upon the ratification of the restructuring plan by the Bankruptcy Judge, or upon the issue of a decision by the Bankruptcy Judge terminating the restructuring proceedings.

Article 104

The provisions prescribed in the Part on preventive settlement in this Law shall apply to contracts, new financing and the Creditors’ Committee.

Section Two – Preparation of the List of Debts

Article 105

The Bankruptcy Department shall notify the Trustee of the decision appointing him within ten days from the date of its issue, and shall provide him with all the information available to it about the debtor. The Trustee shall, within ten days from the date of his notification of the decision appointing him, do the following:
1- Announce a summary of the decision to open the proceedings, provided that the announcement includes an invitation to the creditors to submit their claims and the documents supporting them and to deliver them to him within a period not exceeding one month from the date of the announcement.
2- Notify all creditors whose electronic addresses are known to him to provide him with the claims and documents within one month from the date of the announcement of the summary of the decision to open the proceedings.
The debtor shall provide the Trustee with any additional details of which he has not notified the Bankruptcy Department, whether about his creditors or the amounts of the debts, and the details of any contracts in progress and any pending or ongoing judicial proceedings to which the debtor is a party, within the period specified by the Trustee.

Article 106

The Trustee shall prepare a register in which he records all the creditors of the debtor known to him, and shall submit an updated copy of the entries in that register to the Bankruptcy Department, and he shall record the following in the register:
1- The postal and e-mail address of each creditor, the amount of his claim and its due date.
2- Identification of the creditors holding debts secured by a mortgage or privilege, with details of the securities established for each of them and the estimated value of such securities in the event of enforcement against them
3- Any set-off request submitted in accordance with the provisions of this Law.
4- Any other data that the Trustee deems necessary for the performance of his duties.

Article 107

The Trustee may request any data or information relating to the debtor’s assets or business from any person who has such information, and every person who has information about the debtor’s assets or business shall provide the Trustee with it within ten days from the date on which it is requested from him, including any documents and books of account relating to the debtor.
The Trustee shall maintain the confidentiality of any information relating to the debtor and shall refrain from disclosing it outside the framework of the procedures set out in this Law, except for information that is required to be disclosed under the law, regulations or the instructions of the Regulatory Authorities.
If any person refuses to provide the Trustee with the requested information, the Trustee may refer the matter to the Bankruptcy Judge to determine the importance of the information that may be requested and to order that it be provided to the Trustee.

Article 108

All creditors, even if their debts are not yet due, are secured by a mortgage or privilege, or are not established by final and conclusive judgments, shall deliver to the Trustee, within the time limit specified in the invitation addressed to them in accordance with the provisions of Article (105) of this Law, the documents of their debts accompanied by a statement of such debts, their securities, if any, their due dates and their amounts valued in Kuwaiti dinars on the basis of the exchange rate prevailing on the day of issue of the decision to open the proceedings.
In this case, the Trustee may request the creditor to complete his documents or to provide clarifications regarding the debt, by specifying its amount or characteristics, and he may also request that any claims be certified by an independent auditor or by the creditor’s auditor.

Article 109

A creditor who has received an advance payment on account of his claim from the debtor’s guarantors or third parties shall deduct what he has received from any claim he submits to the Trustee, and any of the debtor’s guarantors or third parties may submit their claims to the Trustee within the limit of the amount paid by them in settlement of the debtor’s debt.

Article 110

The Trustee shall verify the debts within one month from the date of expiry of the period set out in Clauses (1 and 2) of Article (105) of this Law, and he may seek the assistance of the Bankruptcy Committee or the debtor in doing so.
After completing the verification of the debts, he shall deposit with the Bankruptcy Department the list of debts, which shall include the names of the creditors and the amount due to each of them as at the date of the opening of the proceedings, his documents, the reasons for disputing his debt and the Trustee’s opinion on its acceptance or rejection; it shall also include the names of the creditors holding special securities over the debtor’s assets, and shall state the amount due to each of them on the date of the opening of the proceedings, together with a statement of the securities provided to each of them and their estimated value on the date of the proceedings.
Within the ten days following the deposit of the list of debts, the Trustee shall announce the list and state the amounts he considers should be accepted from each debt and those he considers should be rejected.
Debts due to the Government by reason of taxes or fees of all kinds shall be deemed accepted debts without the need for verification by the Trustee, even if they are disputed by the debtor or others, and the value of such debts shall be adjusted in light of the final judgments issued in respect thereof.

Article 111

The debtor and every creditor, even if his name is not included in the list of debts, may file a grievance with the Bankruptcy Department against the debts included in the list within ten days from the date of the announcement of the list, and the Bankruptcy Court shall have jurisdiction to decide the grievance.

Article 112

After the lapse of the period provided for in the preceding Article, the Bankruptcy Judge shall approve a final list of the undisputed debts, and the Trustee shall annotate the statement accompanying the documents of such debts to indicate their acceptance and the amount of the debt accepted.

Article 113

The Bankruptcy Judge may, before the grievance or the challenge filed against the judgment issued thereon is decided, decide to accept the debt provisionally in an amount he estimates, unless a criminal action has been filed in respect thereof.
The Bankruptcy Judge shall approve the list of creditors whose debts have been provisionally accepted, and the Bankruptcy Department shall notify the Trustee thereof.

Article 114

If the dispute relates to the securities of the debt, the debt shall be accepted provisionally as an ordinary debt.

Article 115

The share of the provisionally accepted debt shall be reserved from the proceeds of the sale of the debtor’s assets and upon making any distribution to the creditors in accordance with the provisions of this Law. If the Bankruptcy Court decides not to recognise the provisionally accepted debt, or the debt is reduced, the reserved share shall be returned, to the extent of its proportion, to the general security of the creditors.

Article 116

A creditor who has not submitted the documents supporting his debt within the time limit specified in Article (104) of this Law may submit a request to the Trustee to accept them and to participate in the proceedings. The Trustee’s consent thereto shall be approved by the Bankruptcy Judge, the list of debts shall be amended and re-announced, and such creditor shall recover his debt from the distributions made after the date of acceptance of his debt.
If the Trustee rejects the creditor’s request or does not respond to it within ten days from the date of its submission, the creditor may apply to the Bankruptcy Judge for acceptance of the submission of the documents supporting his debt, and the Bankruptcy Judge shall issue a decision accepting or rejecting the application within ten days from the date of submission of the application. If he orders the acceptance of the debt, the list of debts shall be amended accordingly and the Trustee shall re-announce it.
The Bankruptcy Judge may instruct the Trustee to submit a report on the extent of the impact of the new debt on the draft plan and to refer it to him for ratification. In all cases, the proceedings provided for in this Part shall not be stayed.

Chapter Three – Conduct of Restructuring Proceedings

Section One – Preparation of the Restructuring Plan

Article 117

If the Bankruptcy Judge issues a decision to open restructuring proceedings, the debtor shall, under the supervision of the Trustee, prepare the restructuring plan, and the debtor may seek the assistance of the Bankruptcy Committee in preparing the plan if the indebtedness is subject to its supervision. The debtor shall deposit the plan with the Bankruptcy Department within a period not exceeding three months from the date of the decision, and the Bankruptcy Judge may extend this period for a similar or longer period upon the debtor’s request after hearing the Bankruptcy Committee. In all cases, the approval of the required majority shall be required for any extension that would cause the period for preparing and developing the restructuring plan to exceed six months.
If the restructuring plan is not deposited within the time limit set out in this Article, the Bankruptcy Judge may, upon an application submitted to him by one of the creditors, or by the Bankruptcy Committee if the indebtedness is subject to its supervision, terminate the restructuring proceedings, and the Judge shall issue his decision within ten days from the date of submission of the application.

Article 118

The restructuring plan shall include the following:
1- The debtor’s plan for carrying on his activity.
2- The classification of the categories of creditors, the amounts due to each of them, and the securities provided against each debt and their value.
3- Confirmation of the viability of the debtor’s business.
4- The activities of the debtor that are to be suspended or terminated.
5- The terms and conditions for the settlement of any obligations.
6- Any guarantees for the proper implementation of the plan that the debtor is required to provide, if any.
7- Any offer to purchase all or part of the debtor’s assets as a going concern or in parts, if any.
8. Grace periods and payment discounts.
9- The extent to which the debt may be converted into shares or stocks in the capital of any company or enterprise.
10- The extent to which any securities may be consolidated, created, released, sold or substituted, if this is necessary for the implementation of the plan.
11- A proposed period or periods for the repayment of the entire debt.
12- The extent of the debtor’s need for financing during the period of implementation of the plan, and the purposes and securities of such financing.
13- The mechanism by which the creditors and the Trustee follow up the implementation of the plan, the reports to be submitted on its implementation, the dates for submitting such reports and their contents.
14- Any other matters that the debtor considers useful in implementing the restructuring proposal and wishes to include in the proposal.

Article 119

The Trustee shall notify the Bankruptcy Department, and the Bankruptcy Committee if the debt is one of the debts subject to its supervision, every month of the progress made in preparing the restructuring plan.

Article 120

The debtor shall, within the time limit set out in Article (117) of this Law, notify the Trustee, the Bankruptcy Committee – if the indebtedness is subject to its supervision – the representative of the Creditors’ Committee and the members of the Committee of the plan and its attachments, and the representative of the Creditors’ Committee and each of its members shall notify the category of creditors he represents of the plan and its attachments no later than the end of the business day following the date of his receipt of the plan and its attachments.

Article 121

The plan may be based on the debtor relinquishing all or some of his assets in return for the settlement of all or some of his debts, and consequently the payment of all the debtor’s debts in kind or in cash, or the payment of part of them in kind or in cash and the waiver or rescheduling of the remainder, so that the debtor is discharged from all or part of the debt. The approval of the extraordinary general assembly of the debtor shareholding company, or of the body acting in place of the extraordinary general assembly in other companies, shall be required for the plan.

Section Two – Approval and Ratification of the Restructuring Plan

Article 122

Except for the provisions contained in this Section, the provisions contained in the Part on preventive settlement shall apply to the approval of the restructuring plan, the grievance against such approval, the ratification of the plan and the effect of such ratification, as well as to the implementation of the plan and the termination of its proceedings before its implementation.

Approval of the Plan

Article 123

The debtor shall invite the creditors to approve the restructuring plan by a notification that includes the date and place of the meeting, in accordance with the procedures set out in the restructuring plan, provided that the meeting is held no later than one month from the date of notifying the representative of the Creditors’ Committee and the members of the Committee of the plan and its attachments.
The debtor shall chair the meeting, and the Trustee, one of the creditors or any other person may, with the approval of the required majority, be appointed to chair the meeting.
The debtor shall also, within the time limit set out in the preceding paragraph, send the invitation to the Bankruptcy Committee if the indebtedness is subject to its supervision, and to the relevant Regulatory Authority if the debtor is subject to the supervision of a Regulatory Authority.
If the debtor refrains from holding the meeting as set out in the first paragraph of this Article, the Bankruptcy Judge shall, upon the request of the Trustee or one of the creditors, instruct the Bankruptcy Committee, even if the indebtedness is not subject to its supervision, or the Trustee to call a meeting of the creditors, and the Trustee or whomever the Bankruptcy Committee delegates from among its members, as the case may be, shall chair the meeting.
If attendance is by means of modern communication, the Trustee shall attend the meeting, and in this case it may suffice for the minutes to be signed by the debtor and the Trustee or the chairman of the meeting, unless the Executive Regulations of this Law provide otherwise.

Ratification of the Plan

Article 124

The Trustee shall, within a period not exceeding ten days from the date of the approval or rejection of the restructuring plan by the required majority, notify the Bankruptcy Department and the Bankruptcy Committee, as the case may be, thereof, and shall attach to the notification the approved or rejected plan, the minutes of the meetings and the evidence of attendance and voting, and, where the plan is approved, shall request its ratification.
The Bankruptcy Department shall, within ten days from the date of its receipt of the notification referred to in the preceding paragraph, notify the debtor and all the creditors of the notification referred to in the preceding paragraph and its attachments.
If the plan is rejected, the Bankruptcy Judge may, within a period not exceeding ten days from the date of the notification of the Bankruptcy Department thereof, issue a decision, upon the debtor’s request, either ratifying the rejected plan, provided that the rights of the creditors under the rejected plan are not less than what they would have obtained in the event of the debtor’s bankruptcy, after taking the opinion of the Trustee in this regard and hearing the objections of the creditors, or terminating the restructuring proceedings and shelving the application; and the Bankruptcy Judge may, upon an application submitted to him by the debtor, the Regulatory Authority or the creditors, in accordance with the provisions of this Law regarding the submission of an application for the opening of the proceedings, decide, by a reasoned decision, to open declaration of bankruptcy proceedings.

Article 125

The provision of the last paragraph of the preceding Article shall apply to every decision issued by the Bankruptcy Judge refusing to ratify the plan.

Implementation of the Plan

Article 126

The Trustee shall supervise the implementation of the restructuring plan throughout the term of the plan until its implementation is completed. If the indebtedness is among the debts subject to the supervision of the Bankruptcy Committee, the Committee shall – in coordination with the Trustee as set out in the following Article – supervise the implementation of the restructuring plan.

Article 127

The Trustee shall:
1- Monitor the progress of the plan and notify the Bankruptcy Department and the Bankruptcy Committee – as the case may be – of any failure to implement it.
2- Ensure that the sale of any of the debtor’s assets that are decided to be sold in accordance with the restructuring plan will be made at the best price obtainable under the prevailing market conditions on the date of sale, and that the sale proceeds will be used as set out in the plan.
3- Submit to the Bankruptcy Department and the Bankruptcy Committee – as the case may be – a report on the progress of the implementation of the plan every three months, and every creditor shall have the right to obtain a copy of this report.

Amendment of the Plan

Article 128

The debtor may, at any time during the implementation of the restructuring plan, after notifying the Trustee, and the Bankruptcy Committee if the indebtedness is subject to its supervision, invite the creditors to discuss any amendments he considers necessary to make to the plan. The creditors shall be notified of the proposed amendments and their justifications at least ten days before the date set for the meeting. If the required majority approves the amendments, the debtor shall notify the Bankruptcy Department of the amended plan, the minutes of the creditors’ meetings and the evidence of attendance and voting, and shall request the ratification of the amended plan. The Bankruptcy Judge shall, within ten days from the notification of the Bankruptcy Department of the amended plan, ratify it if it meets the standards of fairness and has obtained the approval of the required majority; otherwise, he shall refuse to ratify the amended plan or suspend its ratification.
A grievance may be filed against the decision ratifying the amended plan in accordance with the provisions set out in Article (84) of this Law.

Termination of Restructuring Proceedings

Article 129

The Bankruptcy Judge may, upon an application submitted to him during the period following the decision ratifying the restructuring plan and before the full implementation of the plan, decide to terminate the restructuring proceedings if either of the following two cases occurs:
1. If the debtor requests the termination of the proceedings on the ground that the conditions for the opening of restructuring proceedings no longer apply to him, or that the restructuring plan is not expected to be implemented in accordance with the terms of the plan.
2. If the debtor or the Regulatory Authority requests the opening of declaration of bankruptcy proceedings.
The Bankruptcy Department shall notify the creditors and the Trustee of the application within ten days from the date of its submission, and the Bankruptcy Judge shall issue a decision approving or rejecting the application within ten days from the date of its submission.

Article 130

If the Bankruptcy Judge decides to terminate the restructuring proceedings, he may, upon an application submitted to him by the debtor, the Trustee, the Regulatory Authority or one of the creditors, decide to open declaration of bankruptcy proceedings.
The Bankruptcy Department shall, within ten days from the date of issue of the decision, publish, announce, disclose, notify and register it in accordance with Article (33) of this Law, and the Bankruptcy Judge may confine himself to registering the judgment in the Bankruptcy Register and the Commercial Register.

Part Five – Declaration of Bankruptcy

Chapter One – General Provisions

Article 131

Subject to the provisions prescribed by this Law regarding the application for the opening of the proceedings, as well as the cases set out in the Part on preventive settlement and the Part on restructuring in which the Bankruptcy Judge may issue a decision to open declaration of bankruptcy proceedings, the Bankruptcy Judge shall issue his decision to open declaration of bankruptcy proceedings if the following conditions are met:
1- The debtor has ceased to pay.
2- There is a deficit in the financial position of the debtor.
3- The debtor’s business is not viable.

Article 132

In all cases in which the Bankruptcy Judge issues his decision to open declaration of bankruptcy proceedings, the Bankruptcy Department shall refer the file of the application for the opening of the proceedings to the Bankruptcy Court within ten days from the date of issue of the Bankruptcy Judge’s decision to open declaration of bankruptcy proceedings, and there shall be deposited in the file a report on the procedures taken on the application from its submission until the issue of the decision to open the proceedings, together with a statement of the factual and legal grounds for the decision.

Article 133

If a list of debts has not previously been prepared in accordance with the provisions set out in the Part on restructuring proceedings, the Trustee shall prepare the list of debts and have it approved by the Bankruptcy Judge.
If a list of debts has previously been prepared, the Trustee shall, within ten days from the date of his notification of his appointment, or from the date of publication of the decision to open declaration of bankruptcy proceedings if he had already been appointed, require the creditors to submit, within ten days from the date of their notification, any final claims not previously submitted. The Trustee may issue this requirement by way of announcement, and no claims received after that date shall be taken into account unless for a reason accepted by the Bankruptcy Judge.
Except as provided in the second paragraph of this Article, the provisions on the preparation of the list of debts provided for in the Part on restructuring proceedings shall apply to the preparation of the list of debts in accordance with the first paragraph of this Article and to its updating in accordance with the second paragraph.

Article 134

No claims previously rejected by the Bankruptcy Judge in accordance with the provisions of this Law shall be taken into account, once the rejection decision has become final.

Article 135

The Trustee shall not be obliged to carry out or complete a verification of the debts or to prepare a list thereof if it becomes apparent to him that the proceeds of the sale of the debtor’s assets will all be spent on paying the fees, charges and costs of taking the proceedings.

Chapter Two – Effects of the Decision to Open Bankruptcy Proceedings

Section One – Inventory of the Debtor’s Assets

Article 136

The Bankruptcy Judge shall delegate one of the employees of the Bankruptcy Department to place, within ten days from the date of issue of the decision to open declaration of bankruptcy proceedings, seals on the debtor’s premises, offices, warehouses, books, papers and movables, and minutes of the placing of the seals shall be drawn up and delivered to the Bankruptcy Judge.
If it becomes apparent to the Bankruptcy Judge that the debtor’s assets can be inventoried in a single day, he may delegate whomever he deems fit to carry out the inventory without the need to place seals.

Article 137

Seals may not be placed on the clothing, movables and necessary items of the debtor and his dependants, which shall be delivered to him under a list signed by him.
The Bankruptcy Judge may order that seals not be placed on, or be removed from, the commercial books, the commercial papers and other papers falling due for payment in the near future or requiring measures to preserve the rights established therein, the cash necessary to meet the urgent affairs of the debtor’s business, items liable to rapid deterioration or to an imminent decrease in value or whose maintenance requires exorbitant expenses, and items necessary for carrying on the debtor’s business if it is decided to continue carrying it on.
The items referred to in the preceding paragraph shall be inventoried in the presence of whomever the Bankruptcy Judge delegates for that purpose, and shall be delivered to the Trustee.
The commercial books shall not be delivered until the Bankruptcy Judge has closed them in the presence of the debtor.

Article 138

The Bankruptcy Judge shall, upon the request of the Trustee, order the removal of the seals in order to inventory the debtor’s assets, and the removal of the seals and the inventory shall commence within ten days from the date of issue of the decision to open declaration of bankruptcy proceedings.

Article 139

The inventory shall be carried out in the presence of the Bankruptcy Judge, or whomever he delegates for that purpose, and the Trustee, and the debtor shall be notified of the day of the inventory and may attend. An inventory list shall be drawn up in two copies signed by the Bankruptcy Judge, or whomever he delegates for that purpose, and the Trustee, one of which shall be deposited with the Bankruptcy Department and the other kept with the Trustee. The list shall state the assets on which seals were not placed or from which they were removed, and the assistance of an asset valuer may be sought in carrying out the inventory and valuing the assets.

Article 140

The Public Prosecution shall have the right to attend the inventory, and it may at any time request to examine the papers and books relating to the bankruptcy estate, and request clarifications regarding its status, the progress of its proceedings and the manner of its management.

Article 141

If the decision to open proceedings is issued after the debtor’s death and no inventory was drawn up on the occasion of the death, or if the debtor dies after the issuance of the said decision and before the drawing up of the inventory has begun or before it has been completed, the inventory shall be drawn up immediately, or the drawing up thereof shall be continued, in the manner set out in Article (139) of this Law, in the presence of the debtor’s heirs or after notifying them to attend. In the event of the debtor’s death after the issuance of the decision to open proceedings for the declaration of bankruptcy and the completion of the inventory, his heirs shall take his place in the proceedings for the declaration of bankruptcy, and they may appoint a person to represent them therein; otherwise, the Bankruptcy Judge shall select a person to represent them in accordance with Article (19) of this Law.

Article 142

After the inventory, the Trustee shall take receipt of the debtor’s assets, books and papers, and shall sign at the end of the inventory list to that effect.
The Trustee shall also receive the correspondence addressed to the debtor and relating to his business; the Trustee may open and retain it, and the debtor may inspect it.

Article 143

If the debtor has not submitted the balance sheet, the Trustee shall prepare it immediately and deposit it with the Bankruptcy Department.

Section Two – Management of the Debtor’s Assets and Business

Article 144

Upon the issuance of a decision to open proceedings for the declaration of bankruptcy, the debtor shall be divested of the right to dispose of and manage his assets and business, and the Trustee shall manage the debtor’s assets and business. All dispositions made by the debtor on the day on which the said decision is issued shall be deemed to have been made after its issuance, and any disposition made in contravention thereof shall be deemed null and void. The Trustee may bring an action before the Bankruptcy Court to obtain a judgment that it is not enforceable, and may also submit the necessary applications to the Bankruptcy Judge for the taking of such precautionary measures as are necessary to protect the rights of the creditors.
The divestment of the debtor shall not prevent him from taking the measures necessary to preserve his rights, in a manner that does not prejudice the interests of the creditors.

Article 145

If the disposition is one that may not be invoked except by entry, registration or other procedures, it shall not be enforceable against the creditors unless the procedure was completed before the issuance of the decision to open proceedings for the declaration of bankruptcy.

Article 146

The divestment of the debtor shall cover all the assets owned by him on the day on which the decision to open proceedings for the declaration of bankruptcy is issued, and the assets the ownership of which passes to him after the issuance of the said decision.
The divestment of the debtor shall not cover the following:
1- Assets that may not be attached by law, and the allowance granted to him.
2- Assets owned by others.
3- Rights relating to his person or to his personal status.
4- Indemnities due to the beneficiary under a valid insurance contract concluded by the debtor before the issuance of the decision to open proceedings for the declaration of bankruptcy. The beneficiary shall return to the Trustee all insurance premiums paid by the debtor as of the day determined by the Bankruptcy Judge or the Bankruptcy Court as the date of cessation of payments, unless the law provides otherwise.

Article 147

The Bankruptcy Judge may, upon the application of the Trustee or the debtor, authorise the continued operation of the debtor’s business if the public interest, the interest of the debtor or the interest of the creditors so requires. The Bankruptcy Judge shall, upon the application of the Trustee, appoint a person to manage the debtor’s business and determine his remuneration. The debtor himself may be appointed to manage it, and the remuneration he receives shall be deemed part of the allowance. The Trustee shall supervise the person appointed to manage the business, and shall submit a monthly report to the Bankruptcy Judge on the debtor’s commercial business.
The Bankruptcy Judge may request the opinion of the Bankruptcy Committee on the applications submitted pursuant to this Article, even if the indebtedness is not subject to the Committee’s supervision.

Article 148

The debtor’s assets may not be sold during the preliminary proceedings period. Nevertheless, the Bankruptcy Judge may, upon the application of the Trustee, authorise the sale of perishable items or items whose maintenance requires exorbitant expenses, and may also authorise the sale of the debtor’s assets to obtain cash to be spent on the affairs of the bankruptcy estate.
In the cases set out in the preceding paragraph, the sale shall be carried out in the manner determined by the Bankruptcy Judge, who may request the Supervisor or the Bankruptcy Committee — where the indebtedness is subject to its supervision — to provide him with their opinion in this regard.

Article 149

The Bankruptcy Judge may, upon the proposal of the Trustee, order, where necessary, that the first sums collected for the account of the bankruptcy estate be used to pay the debts of the creditors who have a privilege over the debtor’s assets and whose names are included in the final list of undisputed debts, within the limit of the value of the assets securing the debt on the date on which such sums are paid. If a dispute arises over the privilege, payment may not be made until the dispute has been settled by a final judgment, and the Bankruptcy Court shall have jurisdiction to settle such disputes.

Article 150

The privilege established for the Government in respect of taxes and fees of all kinds shall cover only the tax due from the debtor for the two years preceding the issuance of a decision to open proceedings for the declaration of bankruptcy.

Section Three – Contracts

Article 151

If the debtor is the lessee of the real property in which he carries on his trade, the lease contract shall continue, and the rent for the remaining term thereof shall not become due by reason of the issuance of a decision to open proceedings for the declaration of bankruptcy. Any condition to the contrary shall be null and void.

Article 152

The Trustee may, within sixty days from the date of issuance of the decision to open proceedings for the declaration of bankruptcy, decide to terminate the lease of the real property in which the debtor carries on his trade, after obtaining the authorisation of the Bankruptcy Judge. In such case, the Trustee shall notify the lessor of the real property of this decision within the said period.

Article 153

In the event of termination of the lease in accordance with the provisions of this Law, the lessor of the premises leased to the debtor shall have a privilege for the two years preceding the issuance of a decision to open proceedings for the declaration of bankruptcy and for the current year, in respect of everything relating to the performance of the lease contract and any compensation that may be awarded.
If the movables present in the leased premises are sold or removed without the lease being terminated, the lessor may exercise his right of privilege in the manner set out in the preceding paragraph, and shall in addition have a privilege for a further year commencing at the end of the current year during which the decision to open proceedings for the declaration of bankruptcy was issued, whether or not the lease contract bears a fixed date.

Article 154

If the Trustee decides to continue the lease, he shall pay the rent in arrears, without prejudice to the right of the lessor to request the termination of the lease contract by reason of refusal or delay in paying the rent. The lessor may request the Bankruptcy Court to terminate the lease unless the Trustee provides sufficient security for the payment of the rent on its due dates.
The Trustee may, after obtaining the authorisation of the Bankruptcy Judge, sublet the real property or assign the lease, even if the debtor is prohibited from doing so under the lease contract, provided that no harm results therefrom to the lessor.

Article 155

If a decision to open proceedings for the declaration of bankruptcy is issued in respect of an employer and the employment contract is for a fixed term, it may not be terminated unless it is decided not to continue the debtor’s business, and in the event of termination of the contract the worker may claim compensation; all of the foregoing unless the Bankruptcy Judge decides otherwise in order to protect the interest of the debtor and the creditors, having regard to the interest of the worker.
If the employment contract is for an indefinite term, either the Trustee or the worker may terminate the contract, subject to the provisions set out in the labour laws.
If it is decided to continue the debtor’s business, the Trustee shall pay wages and salaries regularly on their agreed dates if the debtor’s assets are sufficient for that purpose.

Article 156

If it is decided to continue the debtor’s business, the Trustee shall pay the amounts due to the suppliers of goods and the providers of services necessary for the continuation of the debtor’s business regularly on their dates agreed in the contract, if the debtor’s assets are sufficient for that purpose.

Article 157

The Trustee shall, within the ten days following the issuance of a decision to open proceedings for the declaration of bankruptcy, pay out of the cash in his hands, and notwithstanding the existence of any other debt, the wages and salaries due before the issuance of the decision to open the proceedings. If the Trustee does not have the cash necessary to pay these debts, they shall be paid out of the first cash collected, even if there are other debts ranking ahead of them in the order of privilege.
Amounts due to the said categories in excess of the foregoing shall have the rank of privilege established by law.

Article 158

The following dispositions may not be invoked against the creditors if they were made, during the three months preceding the date of cessation of payments, by the debtor in respect of whose debts a decision to open proceedings for the declaration of bankruptcy has been issued:
1. Donations or gifts, except for small presents in accordance with custom.
2. Any transactions in which the obligations of the debtor are significantly disproportionate to the obligations of the counterparty, whether such obligations are in kind or in cash.
3. Payment of debts before their maturity, whatever the manner of such payment, or in a manner different from that usually followed for the settlement of that type of debt. The creation of a provision for a commercial paper that has not yet fallen due shall be deemed equivalent to payment before maturity; the foregoing unless there are commercial considerations that justify it.
4. Payment of debts that have fallen due by something other than the thing agreed upon. Payment by means of commercial papers or bank transfer shall be deemed equivalent to payment in cash; the foregoing unless there are commercial considerations that justify it.
5. The creation of any type of new security over his assets to secure the payment of a prior debt, unless there are commercial considerations that justify it.
Apart from the dispositions referred to in the preceding paragraph, the Bankruptcy Court may rule that any disposition made by the debtor during the said period is not enforceable if it was prejudicial to the creditors and the transferee knew, or ought to have known, at the time it was made, that the debtor had ceased to pay or that he was in a state of financial insolvency.
The period provided for in this Article shall be two years if the dispositions referred to in this Article were made between the debtor and an insider or a related party.

Article 159

A judgment may be rendered that the registration of mortgage rights or privileges established over the assets of the debtor in respect of whose debts a decision to open proceedings for the declaration of bankruptcy has been issued is not enforceable against the creditors, if the registration was made after the date of cessation of payments, provided that it is proven that the creditor knew that the debtor had ceased to pay his debts.
The provision of the preceding paragraph shall not apply if the registration of the mortgage right and privilege was for the purpose of renewing an existing debt secured by the same rights over the same assets, and these rights were registered as security for the existing debt on a date prior to the date of cessation of payments, or if the registration was made in execution of a notarised contract on a date prior to the date of cessation of payments.
The mortgagee creditor ranking after the mortgage adjudged unenforceable shall take the rank of that mortgage. Nevertheless, he shall not be given out of the proceeds of the sale of the mortgaged asset more than he would have received had the prior mortgage been enforceable, and the difference shall pass to the body of creditors.

Article 160

Actions brought on the basis of the two preceding Articles shall lapse upon the expiry of one year from the date of publication of the decision to open the proceedings.
The Bankruptcy Court may dismiss such actions if it finds that the debtor made the disposition in good faith and for the purpose of carrying on his business, and that, when he did so, there were reasons leading to the belief that the disposition would benefit his business.

Article 161

The Trustee may request that a disposition made by the debtor, before the issuance of the decision to open proceedings for the declaration of bankruptcy, to the detriment of the creditors be declared not enforceable in accordance with the provisions of the Civil Code on the action for the non-enforceability of dispositions. A judgment that the disposition is not enforceable shall render it unenforceable against all the creditors, whether their rights arose before or after the disposition was made.

Article 162

If a disposition is adjudged not enforceable against the creditors, the transferee shall return to the debtor or the Trustee, as the case may be, what he obtained from the debtor under the said disposition, or the value of such thing at the time of its receipt if its return in kind is impossible, and shall also pay interest on what he received, or the fruits thereof, from the date of receipt.
The transferee shall have the right to recover the consideration he gave to the debtor if such consideration is found in specie in the administration of the debtor’s assets. If it is not found, the transferee shall be entitled to claim from the debtor and the creditors the benefit that accrued to them from the disposition, and to participate in the proceedings as an ordinary creditor for any amount in excess thereof.

Article 163

If the debtor is bound to pay a periodic life annuity or to perform obligations payable in instalments, and this was in return for consideration, the Bankruptcy Judge may, upon the application of the creditor, after hearing the opinion of the Trustee and within ten days from the date of submission of the application, order that an amount sufficient to pay the said annuities and instalments be set aside, specifying the manner of their payment.

Article 164

A creditor whose debt is subject to a resolutory condition shall participate in the proceedings upon providing a guarantor. A creditor whose debt is subject to a suspensive condition shall have his share in the distributions set aside until the outcome of the debt becomes clear.

Article 165

The Bankruptcy Judge may, upon the application of the debtor or of his dependants, and after hearing the statements of the Trustee, decide to grant an allowance to the debtor in respect of whose indebtedness a decision to open proceedings for the declaration of bankruptcy has been issued, or for whom it has been decided to entrust the management of his business and assets to a Trustee. The Judge may increase or reduce the amount of the allowance, or order its cancellation, as circumstances require.

Section Four – New and Pending Lawsuits

Article 166

After the issuance of a decision to open proceedings for the declaration of bankruptcy, no action may be brought against the debtor or proceeded with, except for the following actions:
1. Actions relating to assets and dispositions not covered by the divestment of the debtor.
2. Actions relating to the proceedings provided for in this Law which the law permits him to bring or to be a party to.
3. Criminal actions.
If the debtor brings, or there is brought against him, a criminal action or an action relating to his person or his personal status, the Trustee shall be joined therein if it includes financial claims.
The court may authorise the joinder of the debtor in actions relating to the proceedings for the declaration of bankruptcy, and may also authorise the joinder of a creditor in such actions if he has a special interest therein.

Section Five – Powers of Attorney Granted to and by the Debtor, and Management of Companies

Article 167

An agency shall terminate upon the issuance of a decision to open proceedings for the declaration of bankruptcy of the agent or of the principal. Nevertheless, it shall not terminate upon the issuance of a decision to open proceedings for the declaration of bankruptcy if the agent or a third party has an interest therein.
Upon the issuance of a decision to open proceedings for the declaration of bankruptcy, the debtor may not be a manager or a member of the board of directors of any company.

Section Six – Acceleration of Debts

Article 168

The issuance of a decision to open proceedings for the declaration of bankruptcy shall result in the acceleration of all monetary debts owed by the debtor, whether ordinary debts or debts secured by a general or special privilege, and shall also suspend the accrual of interest on ordinary debts as regards the creditors only.
Interest on debts secured by a mortgage or privilege may not be claimed except out of the sums resulting from the sale of the assets securing such debts. The principal of the debt shall be deducted first, then the interest due before the issuance of the decision to open proceedings for the declaration of bankruptcy, then the interest due after its issuance.
If the debts are denominated in a currency other than the Kuwaiti dinar, they shall be converted into Kuwaiti dinars at the official exchange rate on the day on which the decision to open proceedings for the declaration of bankruptcy is issued.

Article 169

The Bankruptcy Court may deduct from a deferred debt for which no interest was stipulated an amount equal to the legal interest for the period from the date of issuance of a decision to open proceedings for the declaration of bankruptcy until the date on which the debt falls due.

Section Seven – Carrying on a New Trade

Article 170

The debtor may, with the authorisation of the Bankruptcy Judge, engage in a new trade with assets other than those of the bankruptcy estate, provided that no harm results therefrom to the creditors. Creditors whose debts arise in connection with such trade shall have priority in obtaining their rights out of its assets.

Article 171

If the debtor pays the value of a commercial paper after the date of cessation of payments and before the issuance of the decision to open proceedings for the declaration of bankruptcy, what was paid may not be recovered from the holder; rather, the drawer, or the person for whose account the commercial paper was drawn, shall be bound to return the amount paid to the Trustee or the debtor, as the case may be, if he knew, at the time the commercial paper was created, that the debtor had ceased to pay.
In the case of a promissory note, the obligation to return shall fall on the first endorser if he knew, at the time he obtained the note, that the debtor had ceased to pay.

Chapter Three – Declaration of Bankruptcy

Article 172

The state of bankruptcy shall arise only by a judgment declaring bankruptcy.
The Bankruptcy Department shall, within ten days from the date of issuance of the judgment of declaration of bankruptcy, announce its operative part, publish it and disclose it on Boursa Kuwait if the debtor is listed thereon, and instruct the debtor to disclose it on his website, and shall register it in the manner set out in Article (33) of this Law. It shall also, within ten days from the date of issuance of that judgment, publish and announce a summary thereof.

Effects of the Judgment Declaring Bankruptcy

Article 173

In addition to the provisions contained in this Chapter, the effects resulting from the issuance of the decision to open proceedings for the declaration of bankruptcy in accordance with this Law shall continue to apply to the bankrupt, and the provisions contained in Part Six of this Law shall apply to his bankruptcy.

Article 174

Any person against whom a final and conclusive judgment has been rendered for committing one of the crimes of fraudulent bankruptcy shall be temporarily deprived of exercising political rights, of membership of parliamentary councils or professional councils, of holding a public office or public assignment, and of being a member of the board of directors of the Chamber of Commerce and Industry or of the boards of directors of cooperative societies, federations and sports clubs, or a manager or a member of the board of directors of any company, until he is rehabilitated in accordance with the law.

Article 175

The bankrupt may not absent himself from his domicile without notifying the Trustee in writing of his place of residence.

Article 176

All correspondence relating to the business of the bankrupt during the proceedings for the declaration of bankruptcy shall include a statement that the debtor is subject to proceedings for the declaration of bankruptcy and the liquidation of assets.

Article 177

The Bankruptcy Judge may, on his own initiative or upon the application of the Public Prosecution or the Trustee, decide to place the bankrupt under surveillance, and the Public Prosecution shall implement this decision immediately upon its issuance. The bankrupt may challenge this decision before the Bankruptcy Court in accordance with this Law, and the Bankruptcy Judge may at any time decide to lift the surveillance of the bankrupt.

Article 178

If, before the judgment declaring bankruptcy becomes final, the debtor becomes able to pay all the debts due from him, the Court of Appeal may, upon the application of the debtor or the Trustee, grant the debtor a period of time to reach a settlement with his creditors, or stay the appeal for such period as it deems appropriate. If the settlement is agreed upon, it shall be submitted to the court for approval and for the cancellation of the judgment declaring bankruptcy, provided that the debtor bears the costs of the action.

Chapter Four – Liquidation and Distribution

Section One – Liquidation and Distribution Plan

Article 179

The Trustee shall invite the debtor and the creditors to a meeting to submit their proposals regarding liquidation and distribution. The meeting shall be held within ten days from the date on which the Trustee takes receipt of the debtor’s assets in accordance with Article (142) of this Law, and the invitation shall be sent by way of notification at least ten days before the date set for the meeting. The Trustee shall chair the meeting, and one of the creditors or another person may, with the approval of the required majority, be appointed to chair the meeting if there are reasons justifying it.
The Bankruptcy Committee shall be invited to attend the meeting where the indebtedness is subject to its supervision.
The Bankruptcy Judge shall, upon an application submitted to him by an interested party, decide within ten days from the submission of the application on any dispute arising in respect of the meetings of creditors held in accordance with this Part, whether the dispute concerns who has the right to call the meeting, to attend it or to vote therein, or the validity of the procedures for holding the meeting and voting therein. The Bankruptcy Judge may, upon the application of one of the creditors, instruct the Bankruptcy Committee, where the indebtedness is subject to its supervision, to call such meetings and to delegate one of its members to chair them, if the Trustee does not hold them on the dates set for holding them.

Article 180

The Trustee shall prepare a plan for the liquidation of the debtor’s assets and their distribution to the creditors, provided that he completes the preparation of that plan and notifies it to the representative of the Creditors’ Committee and the members of the Committee, or to the creditors — where no Creditors’ Committee has been formed — and to the Bankruptcy Department and the Bankruptcy Committee, where the indebtedness is subject to its supervision, within one month from the date of the creditors’ meeting. The Bankruptcy Judge may, upon the application of the Trustee, extend this period by a maximum of three months.

Article 181

The liquidation and distribution plan shall include the following:
1- A statement of all the debtor’s assets and their most recent valuation.
2- The method proposed by the Trustee for the liquidation of the debtor’s assets and the justifications therefor.
3- Whether all the debtor’s assets, or a large part thereof, can be sold at once as a going concern, or whether this will not be possible and they will be sold in parts, and his justification therefor.
4- Whether a distribution in kind of the debtor’s assets to the creditors is possible or not and, if it is possible, which of the two is preferable.
5- The appropriate timing of the sale.
6- A statement of the assets to be sold at auction and those proposed to be sold otherwise than by auction.
7- Whether a settlement can be made with the debtor’s shareholders in return for relinquishing their ownership in the debtor company to the creditors and settling the indebtedness in return for their shares in the company, whether this would be preferable for the creditors, and whether this would be done through the establishment of a special purpose company to which the debtor’s assets are transferred and whose shares are distributed to the creditors, or through the transfer of the shares of the shareholders in the debtor company to the creditors, or by any other method.
8- A statement of the manner in which the proceeds of the liquidation of the debtor’s assets will be distributed to the creditors, setting out the ranking of the creditors and their priorities and the amount expected to be collected by each of them.
9- The expected timetable for the completion of the liquidation and distribution process.
10- Whether the Trustee will prepare a distribution list in respect of the proceeds of the assets he sells during specific periods, such as three or six months, or will prepare a distribution list whenever he sells a certain percentage of the debtor’s assets, or otherwise, and his justification therefor.
11- The maximum period that may elapse between the collection of the proceeds of the sale of an asset and their distribution to the creditors.
And any other matters which the Trustee deems necessary to include in the plan or which the Bankruptcy Judge instructs him to include.
The Bankruptcy Judge may exempt the Trustee from including any of the items set out in this Article if he considers them unsuitable for the bankrupt’s situation.

Section Two – Voting on the Liquidation and Distribution Plan

Article 182

The Trustee shall invite the creditors to approve the liquidation plan by a notification specifying the date and place of the meeting, provided that the meeting is held no later than one month from the date of notifying the representative of the Creditors’ Committee and the members of the Committee, or the creditors, of the plan and its attachments.
The Trustee shall chair the meeting, and one of the creditors or another person may, with the approval of the required majority, be appointed to chair the meeting if there are reasons justifying it.
The Trustee shall also, within the period set out in the preceding paragraph, send the invitation to the Bankruptcy Committee where the indebtedness is subject to its supervision.
If the Trustee refrains from holding the meeting in the manner set out in the first paragraph of this Article, the Bankruptcy Judge shall, upon an application submitted to him by one of the creditors, instruct the Bankruptcy Committee, even if the indebtedness is not subject to its supervision, to call a meeting of the creditors, and the meeting shall be chaired by such of its members as the Bankruptcy Committee delegates.

Article 183

Only creditors whose debts have been admitted, even provisionally, may participate in voting on the liquidation and distribution plan. The liquidation and distribution plan shall have obtained the approval of the creditors if the required majority approves it. If the plan does not obtain the approval of the required majority at the first meeting of the creditors, the meeting shall be adjourned for ten days to a second meeting to be held to vote on the plan.
If no settlement is reached with the creditors who did not approve the plan, and the plan does not obtain the approval of the required majority at the adjourned meeting, this shall be deemed a rejection of the liquidation and distribution plan.

Article 184

Minutes shall be drawn up of the proceedings of the meeting for voting on the liquidation and distribution plan, signed by the Trustee, the person who chaired the meeting, the creditors present who are entitled to vote and the representative of the Creditors’ Committee. If any creditor refuses to sign, his name and the reason for his refusal to sign shall be stated in the minutes.
If attendance was by means of modern means of communication, the minutes shall be signed by the Trustee together with a representative of the Bankruptcy Committee, as the case may be.

Section Three – Adoption of the Liquidation and Distribution Plan

Article 185

The Trustee shall, within ten days from the creditors’ approval or rejection of the liquidation and distribution plan, notify the Bankruptcy Department thereof, attaching to the notification the plan presented to the creditors, the minutes of the creditors’ meetings and evidence of attendance and voting. If the plan is approved, he shall request its approval by the Bankruptcy Judge.
If the creditors reject the plan, the Bankruptcy Judge shall, within ten days from the date on which the Bankruptcy Department is notified thereof, instruct the Bankruptcy Committee — where the indebtedness is subject to its supervision — to make the necessary amendments to the plan in the light of the creditors’ observations and the opinion of the Trustee, and in a manner that achieves the common interest of the creditors, or to submit an alternative plan, within the time limit he determines.
In all cases, the Bankruptcy Judge shall issue his decision approving the plan within ten days from the date on which the Bankruptcy Department is notified thereof.

Article 186

The Bankruptcy Judge may approve the liquidation and distribution plan even if it proposes the sale of all or some of the debtor’s assets by public auction or otherwise than by public auction, or the sale of all or part of the debtor’s assets as a single unit as a “going concern” or on any other basis, or their sale in parts, or any other proposals.
The Executive Regulations shall set out the conditions and procedures for the sale of the debtor’s assets by auction, provided that the procedures include the manner of determining the reserve price at which the auction for the sale of the debtor’s assets, whether securities, real property or other assets of the debtor, will be opened; the procedures for the announcement of the auction; the manner of submitting bids; the rules for submitting bids in sealed envelopes; the cases in which the bidder remains bound by his bid; and the procedures for reducing the reserve price and for selling the asset without setting a reserve price to the highest bidder where no purchaser comes forward to purchase at the reserve price.

Article 187

Neither the debtor nor any party related to him may submit an offer to purchase any of the debtor’s assets offered for sale except when they are offered at a public auction.

Article 188

The Trustee shall submit to the Bankruptcy Judge a monthly statement on the status of the liquidation, the amount of the sums deposited, and the distributions he has made to the creditors in accordance with the plan.

Section Four – Ranking of Debts

Article 189

1- The costs of selling the bankrupt’s assets that are subject to a privilege or mortgage shall be paid in priority to the rights of the creditor holding the privilege or mortgage over such assets.
2- Subject to the provision of the preceding paragraph, the creditor holding a privilege or mortgage shall have priority over the other creditors in obtaining his rights out of the proceeds of the sale of the debtor’s asset over which he holds a privilege or mortgage.
3- The remainder of the debtor’s assets shall be distributed to his creditors. If the debtor’s assets are insufficient to pay his debts, and without prejudice to the provision of Clauses (1 and 2) of this Article, the debtor’s assets shall be distributed according to the order set out in this Clause, and each creditor shall have priority in obtaining his rights in full over the creditor ranking after him:
a- Maintenance ordered for the wife, children and relatives.
b- Any fees, charges or expenses incurred to provide goods and services for the debtor’s activity, or any debts that were necessary for the debtor’s business or benefited his assets, all of which having arisen after the issuance of the decision to open the proceedings.
c- Fees, charges and costs arising from the conduct of any proceedings in accordance with this Law.
d- Any unpaid wages, salaries or remuneration of the debtor’s workers arising under the labour laws, including the contributions which the debtor, as employer, is required to pay in respect of his workers to the Public Institution for Social Security.
e- Amounts imposed for delay in paying the contributions due to the Public Institution for Social Security.
f- The amount of duties imposed on goods held at customs and due in accordance with the customs regulations.
g- Debts due to ministries, public authorities and public institutions, or any debt due to the State Public Treasury.
h- Debts arising from unsecured financing granted to the debtor after the opening of any of the proceedings set out in this Law, unless the terms of granting the financing provide otherwise.
i- Debts due to ordinary creditors (creditors to whom the debtor’s debts are not secured by a mortgage or privilege, and creditors whose debts are secured by a mortgage or privilege to the extent of the unpaid portion of the debt after the distribution of the proceeds of the sale of the asset subject to the privilege or mortgage).
j- Subordinated debts, unless the instruments creating such debts provide otherwise.
k- Perpetual sukuk and bonds, unless the instruments creating such debts provide otherwise.
l- If anything remains thereafter, it shall go to the shareholders or partners and be distributed among them according to the ownership percentage of each of them.
4- The priority of creditors holding debts secured by a privilege shall be determined according to the type and priority of the privilege as set out in the law that created the right of privilege, and the rank of a mortgagee creditor shall be determined by the rank of his mortgage. If the creditors have the same priority of privilege or rank of mortgage, the debtor’s asset subject to the privilege or mortgage shall be divided among them pro rata.
5- If the proceeds of the sale of the debtor’s asset subject to a privilege or mortgage are insufficient to satisfy the rights of the creditor holding the privilege or mortgage in full, that creditor shall be treated as an ordinary creditor in respect of the remaining amount of his debt.

Section Five – Implementation of the Liquidation and Distribution Plan

Article 190

The Trustee may not pay a creditor’s share in the distributions unless the creditor presents the instrument of debt endorsed with a notation of its verification and admission, and the amounts paid shall be noted on the instrument of debt.
If the creditor is unable to present the instrument of debt, the Bankruptcy Judge may authorise the payment of his debt after verifying its admission. In all cases, the creditor shall give a receipt on the distribution list.

Article 191

If six months elapse without the liquidation being completed, or without tangible progress therein, the Trustee shall submit to the Bankruptcy Judge a report on the status of the liquidation and the reasons for the delay in completing it. The Bankruptcy Department shall notify the creditors of this report and invite them to a meeting to discuss it. This procedure shall be repeated whenever six months elapse without the Trustee completing the liquidation work.

Article 192

Within ten days of completing the liquidation work, the Trustee shall notify the Bankruptcy Department and the creditors thereof, and shall attach to the notification a final account of the transactions of the bankruptcy estate showing how the liquidation and distribution plan was implemented. He shall invite the creditors and the debtor to a meeting to discuss the final account and to express their observations thereon. The meeting shall be validly convened with whoever attends it of the creditors or the debtor. The Bankruptcy Committee shall be invited to attend the meeting if the indebtedness is subject to its supervision. The meeting shall be held no later than one month from the date of notifying the creditors of the completion of the liquidation work.
The final account shall show the shares of the debts that have not been finally admitted and of those in respect of which disputes have not ended; such shares shall be set aside and kept in the court treasury until a final decision is made thereon, and shall be paid to the person entitled thereto on the basis of a decision of the Bankruptcy Judge.

Article 193

The Trustee shall notify the Bankruptcy Department and the creditors of a copy of the minutes of the meeting referred to in the preceding Article within ten days of the date of the meeting. The bankruptcy estate shall be deemed concluded by operation of law upon the close of the meeting referred to in the preceding Article. The Trustee shall be responsible, for a period of three years from the date of conclusion of the bankruptcy estate, for the books, documents and papers delivered to him by the debtor or pertaining to the debtor.
He shall also, within ten days of the date of the meeting, make an announcement of the conclusion of the bankruptcy estate, and publish and register a statement to that effect.
The Bankruptcy Judge shall decide on any grievance submitted concerning the conclusion of the bankruptcy estate, upon an application submitted to him by the interested creditor, within ten days of the date of submission of the grievance.

Article 194

The Trustee shall deliver to the debtor any surplus amounts on liquidation after all of the debtor’s debts have been paid, and shall return all documents in his custody to the person entitled to receive them after the conclusion of the proceedings and the performance of his work.

Article 195

Upon the conclusion of the bankruptcy estate, each creditor shall regain the right to take individual proceedings to obtain the remainder of his debt. If the creditor’s debt has been verified and finally admitted in the bankruptcy estate, the judgment declaring the debtor bankrupt shall be deemed an enforceable instrument, under which each creditor may levy execution against the property of his debtor within the limits of his debt. The registry of the Bankruptcy Court or of the Court of Appeal, as the case may be, shall issue to each creditor an enforceable copy of the judgment stating the name of its holder and the amount of the debt due to him, on the basis of a certificate issued to that effect by the Bankruptcy Department.

Chapter Five – Closure and Termination of the Bankruptcy Estate

Section One – Closure of the Bankruptcy Estate for Insufficiency of Assets

Article 196

If the work of the bankruptcy estate is stopped due to insufficiency of funds before the judicial composition is ratified, the Bankruptcy Judge may decide to close the bankruptcy estate.
The decision to close the bankruptcy estate due to insufficiency of its funds shall result in each creditor regaining the right to take proceedings and to bring individual actions. If the creditor’s debt has been verified and finally admitted in the bankruptcy estate, he may levy execution against the debtor in accordance with the provisions of Article (195) of this Law.
The Trustee of the bankruptcy estate shall be responsible, for a period of one year from the date of the decision to close the bankruptcy estate, for the documents delivered to him by the creditors.

Article 197

The bankrupt and any interested party may request the Bankruptcy Judge to revoke the decision to close the bankruptcy estate if it is established that there are sufficient funds to meet the expenses of the work of the bankruptcy estate, or if a sufficient amount for that purpose is delivered to the Trustee.

Article 198

The Bankruptcy Department shall publish, announce and register the decision to close the bankruptcy estate within ten days of the date of its issuance.

Section Two – Termination of the Bankruptcy Estate upon Cessation of the Creditors’ Interest

Article 199

After the final list of creditors has been drawn up in the manner set out in this Law, the Bankruptcy Judge may, upon the application of the bankrupt or the Trustee, issue a decision concluding the bankruptcy estate if either of the following two conditions is met:
1. All of the debtor’s debts included in the final list of creditors have been paid.
2. Amounts or a bank guarantee sufficient to pay the debtor’s debts have been deposited.

Article 200

The Bankruptcy Judge may not issue a decision concluding the bankruptcy estate on the ground that the creditors’ interest has ceased to exist unless the Trustee has submitted a report showing that one of the two conditions provided for in the preceding Article has been met.
The bankruptcy estate shall be concluded upon the issuance of the decision, and the Bankruptcy Department shall, within ten days of the date of issuance of the decision, publish, announce and register it.

Section Three – Composition

Conclusion of the Composition and its Effects

Article 201

A composition on the indebtedness may be made after a final judgment declaring the debtor bankrupt has been issued, in accordance with the provisions set out in the following Articles. No composition may be concluded with a bankrupt who has been sentenced to the penalty for fraudulent bankruptcy. If an investigation is commenced against the bankrupt for the offence of fraudulent bankruptcy, consideration of the composition shall be postponed.
A sentence against the bankrupt for the penalty for negligent bankruptcy shall not preclude a composition with him. If an investigation is commenced against the bankrupt for the offence of negligent bankruptcy, the creditors may deliberate on the composition or postpone the deliberation.

Article 202

The application for composition shall be submitted to the Bankruptcy Department by the debtor or the Trustee, stating its terms and accompanied by an updated list of the creditors and the amounts of their debts as at the date of submission of the application.

Article 203

If the application for composition is submitted by the Trustee, he shall attach thereto a report on the status of the bankruptcy estate and the proceedings taken in respect thereof, together with evidence that he has presented the terms of the composition to the debtor and granted him a period of at least ten days to express his opinion thereon, a statement as to whether or not the debtor has expressed his opinion on the terms of the composition, and the Trustee’s comments on the debtor’s opinion.
If the application is submitted by the debtor, he shall notify the Trustee of the terms of the composition before submitting the application, and shall request him to provide his opinion thereon and to provide a report on the status of the bankruptcy estate and the proceedings taken in respect thereof. The Trustee shall provide the debtor with what is requested within ten days of the date of his notification. The debtor shall state in the application evidence that he has taken these steps, and shall also state the observations he has received from the Trustee and his comments thereon, and shall attach to the application the report sent by the Trustee, where the Trustee has responded to the debtor.

Article 204

Within ten days of the submission of the application for composition, the Bankruptcy Department shall notify the Bankruptcy Committee of the application and its attachments if the indebtedness is subject to its supervision. Within the same period, it shall also notify the creditors and the Trustee if the application is submitted by the debtor, and shall notify the debtor thereof if the application is submitted by the Trustee.

Article 205

Within ten days of being notified, the Trustee shall invite the creditors to a meeting to discuss the terms of the composition. If the application is submitted by the debtor and the Trustee has not previously expressed his observations on the terms of the composition or provided the debtor with the report referred to in Article (203) of this Law, he shall attach to the invitation the report referred to in that Article and his observations on the terms of the composition.
The provisions of Article (182) of this Law shall apply to the invitation to the meeting and to voting therein.

Article 206

The Trustee shall notify the Bankruptcy Department of the creditors’ approval or rejection of the composition within ten days of the date of the meeting at which the approval or rejection was decided, and shall attach to the notification the terms of the composition, the minutes of the meetings and evidence of attendance and voting. Where the creditors approve the terms of the composition, he shall request its ratification, and the Bankruptcy Judge shall ratify it within ten days of the date of notifying the Bankruptcy Department of the approval of the composition. The Bankruptcy Department shall, within ten days of the issuance of the decision ratifying the composition, publish and announce the decision and register its summary, and shall notify thereof the Real Estate Registration and Authentication Department, the Clearing Agency and the custodians.
Ratification of the composition shall render it effective against the creditors who are entitled to vote on the terms of the composition, and it shall be enforceable against those creditors who approved it and those who rejected it, objected to it or did not attend the meeting.

Article 207

To secure the rights of the creditors to whom the composition applies, each of the Real Estate Registration and Authentication Department, the Commercial Registry Department, the Clearing Agency and the custodians shall, each within the limits of its competence and within ten days of being notified of the composition, create a pledge over the real estate owned by the bankrupt in the records of the Real Estate Registration and Authentication Department, the securities he owns deposited with a clearing agency, the investment portfolios he owns or funds deposited with a custodian, and the commercial establishment and the shares in partnerships registered in his name in the Commercial Register, unless the composition agreement provides otherwise. The Trustee shall cancel the pledge after the terms of the composition have been performed.

Article 208

The Trustee shall supervise the performance of the terms of the composition, and shall submit a periodic report, every month or at such other interval as the Bankruptcy Judge may determine, of which he shall notify the Bankruptcy Department, the creditors, the debtor and the Bankruptcy Committee (if the indebtedness is subject to its supervision), on the steps taken to perform the terms of the composition.

Article 209

Upon full performance of the terms of the composition, the Trustee shall submit an application to the Bankruptcy Department for the issuance of a decision concluding the bankruptcy estate by composition, and shall notify the parties set out in the preceding Article of this application within ten days of the date of its submission. The creditors shall submit their objections to the Bankruptcy Department within ten days of the date of their notification of the application.
The Bankruptcy Judge shall issue his decision on the application within ten days of the date of its submission. If he approves the application, he shall issue his decision concluding the bankruptcy estate by composition, and the Bankruptcy Department shall publish, announce and register the decision within ten days of the date of its issuance.

Article 210

The Trustee shall submit to the Bankruptcy Department a final account of the bankruptcy estate within ten days of the issuance of the decision concluding the bankruptcy estate by composition, and the Bankruptcy Department shall notify the debtor of the final account within ten days of the date of its submission.
The debtor may object to the final account within ten days of the date of his notification. The objection shall be submitted to the Bankruptcy Department, and the Trustee shall be notified thereof within ten days of the date of its submission. The Trustee shall respond to the objection within ten days of the date of his notification. Within ten days of the expiry of the period granted to the Trustee to respond, the Bankruptcy Department shall refer the objection file to the Bankruptcy Court for a decision on the objection, accompanied by a memorandum setting out its opinion on the objection.

Article 211

All effects of bankruptcy shall cease upon the issuance of the decision concluding the bankruptcy estate by composition.

Annulment and Rescission of the Composition

Article 212

The composition shall be annulled if either of the following two cases occurs:
1. If, after its ratification or after the issuance of the decision concluding the bankruptcy estate by composition, a judgment is issued convicting the bankrupt of one of the offences of fraudulent bankruptcy.
2. If, after its ratification or after the issuance of a decision concluding the bankruptcy estate by composition, fraud arising from concealment of the bankrupt’s assets or exaggeration of his debts comes to light. In this case, annulment of the composition shall be applied for within three years of the date of knowledge of the fraud.

Article 213

Any person concerned may apply for rescission of the composition if the bankrupt fails to perform its terms.

Article 214

An application for annulment or rescission of the composition shall be submitted to the Bankruptcy Department by one of the creditors, accompanied by all documents, data and information indicating the existence of either of the two cases of annulment of the composition or of the ground for rescission. The Bankruptcy Department shall, within ten days of the submission of the application, notify the creditors of the application and its attachments, and shall also notify thereof the debtor, the Trustee of the bankruptcy estate who was appointed to administer the bankruptcy estate, and the Bankruptcy Committee if the indebtedness is subject to its supervision.
The debtor shall respond to the application within ten days of the date of his notification, and the Trustee may submit any observations he has on the application within the same period.

Article 215

If the application and its attachments, on their face, reveal that it is serious, the Bankruptcy Judge shall issue a decision accepting it within ten days of the date of expiry of the period set out in the second paragraph of the preceding Article, and shall refer the application file to the Bankruptcy Court, accompanied by a report on the application and the proceedings taken therein.
The Trustee shall, in the presence of the Bankruptcy Judge or whomever he designates for that purpose, within ten days of the issuance of the decision referred to in the preceding paragraph, carry out a supplementary inventory of the bankrupt’s property and draw up a supplementary balance sheet.

Article 216

The decision accepting the application and referring it to the Bankruptcy Court shall be published, announced and registered, and the debtor, the creditors, the Trustee and the Bankruptcy Committee shall be notified thereof, within ten days of the date of its issuance.
This decision shall have the same effects as those of the decision to open the proceedings for declaration of bankruptcy under this Law. The Trustee of the bankruptcy estate shall resume the administration of the debtor’s property as from the day following the date of its issuance. If his return is not possible due to his withdrawal or for any other reason, the Bankruptcy Judge shall appoint another Trustee in accordance with the provisions of this Law.

Article 217

The decision referred to in the preceding Article shall be deemed void by operation of law, with all the consequences thereof, if either of the following two cases occurs:
1- A judgment is issued by the Bankruptcy Court rejecting the application for annulment of the composition, rejecting the application for its rescission, or declaring the application inadmissible.
2- If the decision was issued in respect of an application for annulment of the composition and a decision is issued by the Public Prosecution to close the investigation, or a judgment is issued by the criminal court acquitting the accused, in respect of the same facts on which the application was based.

Article 218

Subject to the provisions of the two preceding Articles, if an investigation is commenced against the bankrupt for the offence of fraudulent bankruptcy after the ratification of the composition or after the issuance of a decision concluding the bankruptcy estate by composition, or if a criminal action is brought against him for this offence after such ratification or decision, the Bankruptcy Judge may, upon the request of the Public Prosecution or any person concerned, order such precautionary measures as he deems fit to preserve the debtor’s property. These measures shall lapse automatically if it is decided to close the investigation or if the bankrupt is acquitted.

Article 219

The Bankruptcy Court shall decide on the application within ten days of the date of the first hearing for its consideration.
If the Court rules that the composition is annulled or rescinded, the Bankruptcy Department shall, within ten days of the date of issuance of the judgment, publish, announce and register a summary of this judgment.

Article 220

The Trustee shall invite the new creditors to submit the documents of their debts in accordance with the procedures for verification of debts, and the new debts shall be verified in accordance with those procedures, without re-verifying the debts previously admitted; the Trustee shall update the data thereof in the light of what has been paid of them.

Article 221

Annulment of the composition shall result in the discharge of the guarantor in good faith who guarantees the performance of the terms of the composition. Rescission of the composition shall not result in the discharge of the guarantor who guarantees the performance of its terms, and such guarantor shall be summoned to attend the hearing at which the application for rescission of the composition is considered.

Article 222

Upon annulment or rescission of the composition, the creditors shall regain their debts in full, in relation to the bankrupt only. Such creditors shall participate in the body of creditors with their full original debts if they have not received anything of the portion determined for them in the composition; otherwise, their debts shall be reduced by the value of what they have received.
The provisions set out in the preceding paragraph shall apply where the debtor is declared bankrupt before the terms of the composition have been fully performed.

Part Six – Common Provisions

Article 223

The provisions set out in this Part shall apply to the proceedings of preventive settlement, restructuring and declaration of bankruptcy, unless otherwise provided.

Chapter One – Effects of a Decision to Open Proceedings

Section One – Secured Creditors and Creditors Holding Preferential Rights

Article 224

The owner of assets in the possession of the debtor may, after obtaining permission from the Bankruptcy Judge, reclaim such assets if he proves that he would suffer serious harm as a result of not reclaiming them that is disproportionate to the harm that the debtor and the other creditors would suffer as a result of their loss.
The serious harm referred to in the preceding paragraph shall be established if either of the following two cases occurs:
a- If the value of the assets is expected to decrease substantially.
b- If the assets are not necessary for the implementation of the preventive settlement proposal or the restructuring plan, or for the sale of the bankrupt debtor’s property as a going concern.

Article 225

Secured creditors may, after obtaining the permission of the Bankruptcy Judge, take enforcement proceedings against the property securing their debts or exercise their rights provided for in the contract. In this case, the sale may be carried out through the Trustee without the need to follow enforcement procedures. The creditor shall pay to the Bankruptcy Department sale fees as determined by the Executive Regulations of this Law, and shall also pay fees to the Trustee in accordance with a decision issued by the Minister upon the proposal of the Bankruptcy Committee. The sale fees and the Trustee’s fees shall be collected after the sale is completed and the price is collected. If no Trustee has been appointed, the Bankruptcy Judge may appoint a Trustee upon the application of the creditor to carry out the duties provided for in this Article.

Article 226

The Trustee, the debtor and the Bankruptcy Committee (if the indebtedness is subject to its supervision) shall be notified of any application submitted by secured creditors under the preceding Article within ten days of the date of its submission. The Bankruptcy Committee, the Trustee or the debtor may object to the creditor’s application before the Bankruptcy Judge within ten days of the date of their notification, in the following cases:
1- If granting the application would hinder the debtor from carrying on his business in a viable manner.
2- If granting the application would preclude the submission of a preventive settlement proposal or a restructuring plan capable of being accepted by the creditors, or would render the preventive settlement or the restructuring unviable.
3- If granting the application would cause the debtor and the creditors harm exceeding the harm that the creditor might suffer if his application is rejected.
The Bankruptcy Judge shall issue his decision on the objection within ten days of the date of its submission.

Article 227

Subject to the provisions of the preceding Article, the Bankruptcy Judge shall issue his decision within ten days of the date of submission of the application for permission. If he grants the permission, the creditor or the Trustee shall ensure that the property securing the debtor’s debts is not sold, or its ownership transferred, at a price that is 10% or more below its market value during the two months preceding the sale or transfer of ownership; otherwise, he shall obtain a new permission from the Bankruptcy Judge for the sale or acquisition at that value.

Article 228

The Bankruptcy Judge may refuse permission for the sale, whether the indebtedness is subject to preventive settlement, restructuring or declaration of bankruptcy proceedings, upon an objection submitted to him by the debtor, the Trustee or the Bankruptcy Committee (as the case may be) within the time limits set out in Article (226), if the objector proves that the interest of the creditors requires that all or part of the debtor’s property (including the property securing the said creditors) be sold as a going concern.

Article 229

The Trustee or the debtor may offer the secured creditors an alternative security, provided that it is equivalent to the existing security. If they do not accept this offer, the Bankruptcy Court may rule that the security be substituted if it finds that the alternative security is not lower in value than the existing security and does not prejudice the interest of the creditor to whom the alternative security is offered, without prejudice to the priority and effects of the prior registration. In comparing it with the existing security, account shall be taken of the level of marketability and the level of price volatility.

Article 230

The Articles of this Section shall apply to a party contracting with the debtor under repurchase agreements, where the contracting party has acquired ownership of an item of the debtor’s property in return for granting the debtor a sum of money, and the debtor has retained the right to recover that item if he pays a sum of money to the contracting party within a specified period.

Article 231

Without prejudice to the right of priority in the satisfaction of debts in accordance with the law, the proceeds of the sale of the property securing the secured debts shall be paid to the Trustee, and the Trustee shall pay to the secured creditor what is due to him from the proceeds of the sale. If the proceeds of the sale exceed the secured debt, the Trustee shall retain the surplus for the payment of the remaining debts of the debtor where the Trustee is administering the debtor’s property and business; otherwise, he shall deliver the surplus to the debtor. If the proceeds of the sale are insufficient to pay the secured debt in full, the creditor shall participate in the proceedings with the amount of the difference as an ordinary creditor.
The amounts set out in the preceding paragraph shall be paid to the secured creditor no later than ten days from the date on which the Trustee collects the proceeds of the sale, without waiting for the procedures for distribution of debts among the creditors under this Law.
If the property securing the debt is sold during the preventive settlement proceedings, the proceeds of its sale shall be paid directly to the creditor up to the amount of the secured debt. If the proceeds of the sale exceed the secured debt, the surplus shall be paid to the debtor. If the proceeds of the sale are insufficient to pay the secured debt, the creditor shall participate in the proceedings with the amount of the difference as an ordinary creditor.

Article 232

The Trustee or the debtor (as the case may be) may, after obtaining permission from the Bankruptcy Judge, pay the debt secured by a pledge in order to use the pledged property for the benefit of the other creditors.

Section Two – Co-obligors of a Single Debt

Article 233

Where several obligors are bound by a single debt and a decision to open the proceedings is issued in respect of one of them in relation to that debt, such decision shall have no effect on the other obligors, unless otherwise provided.
Where the preventive settlement proposal, the restructuring plan or the composition relating to the indebtedness in respect of which the decision to open the proceedings was issued is ratified, its terms shall apply to the other obligors.

Article 234

If a creditor has received part of the debt from one of the obligors bound by a single debt, and a decision to open the proceedings is subsequently issued in respect of the remaining obligors or one of them, the creditor may not participate in the proceedings except for the remainder of his debt, and he shall retain his right to claim this remainder from the obligor in respect of whose obligation no decision to open the proceedings has been issued. That obligor may participate in the proceedings under this Law for what he has paid on behalf of the debtor in respect of whom the decision to open the proceedings was issued.

Article 235

If a decision to open the proceedings is issued in respect of all the obligors bound by a single debt at the same time, the creditor may participate in each of the proceedings relating to each obligor with his whole debt until he receives it in full, including principal, interest and expenses. If the total amount received by the creditor exceeds his debt and its accessories, the excess shall revert to the property of the debtor who is guaranteed by the others according to the order of their obligations in the debt. If there is no such order, the excess shall revert to the property of the debtors that paid more than their share of the debt.

Section Three – The Estate of a Deceased Debtor

Article 236

If an inheritance devolves upon the debtor, he shall notify the Trustee or the creditors (as the case may be). His creditors shall have no right over the property of the inheritance until the creditors of the deceased have satisfied their rights from such property, and the creditors of the deceased shall have no right over the debtor’s property.
If the debtor’s property is subject to administration by the Trustee, or if precautionary measures have been taken in respect thereof, the Trustee shall take the necessary measures to protect the interests of the creditors with respect to the debtor’s rights in that inheritance.

Section Four – Payment of Debts

Article 237

After the issuance of the decision to open the proceedings, the debtor may not pay the debts owed by him.
The provision of the preceding paragraph shall not apply to debts arising from the rights of workers and of suppliers of machinery, equipment, tools, goods and services, or other things necessary for the continuation of the debtor’s business and the preservation and development of his property. Nor shall the provision of the preceding paragraph apply to the maintenance necessary for the debtor and his family; such amounts shall be paid periodically on their due dates from the debtor’s property.

Section Five – Set-off

Article 238

Set-off may not be effected between debts that arose after the decision to open the proceedings, unless this is pursuant to the implementation of the preventive settlement proposal or the restructuring plan, or pursuant to a decision of the Bankruptcy Judge, which shall be issued within ten days of the date of submission to him of an application to that effect by the Trustee or the creditor.

Article 239

The remainder of the debt due to the creditor after the set-off is effected shall be included among the debtor’s debts and shall take the rank held by the original debt. The remainder due to the debtor shall likewise be included in the debtor’s property and shall be paid to the person administering the debtor’s property and business.

Article 240

A person who has been conventionally subrogated to the rights of a creditor may not invoke set-off between the rights that have devolved upon him from the creditor and the debts owed by him to the debtor. He shall pay the debtor’s rights in accordance with his agreement with the debtor, and shall be subrogated to the creditor who assigned his rights to him in the proceedings against the debtor.

Section Six – Distribution of Profits, and Directors’ Dealings in their Shares

Article 241

After the issuance of the decision to open the proceedings, neither the debtor nor the Trustee may carry out any of the following acts except with the permission of the Bankruptcy Judge:
1- Distributing profits to shareholders and partners.
2- Disposal by the members of the Board of Directors and the managers of their shares in the debtor company.
Nor may any amendment be made to the company’s memorandum of association except after obtaining the approval of the Bankruptcy Committee, in respect of amendments made during the preventive settlement proceedings, or of the Trustee, in respect of amendments made during the restructuring or declaration of bankruptcy proceedings.
The Bankruptcy Committee or the Trustee may reject the amendment within ten days of being notified if the amendment would affect the rights of the creditors. The debtor may object before the Bankruptcy Judge to the decision of the Bankruptcy Committee or the Trustee within ten days of being notified, and the Bankruptcy Judge shall issue his decision within ten days of the date of submission of the objection.

Section Seven – Settlement and Clearing of Securities

Article 242

The issuance of the decisions provided for in this Law, including the decision to open the proceedings, the decision ratifying the preventive settlement proposal or the restructuring plan, or the issuance of a judgment declaring bankruptcy, shall not affect the settlement and clearing procedures for securities carried out through the Clearing Agency or the Central Intermediary. Such procedures shall remain subject to the provisions of Law No. (7) of 2010 referred to above and the rules applicable at the Exchange and approved by the Authority.
The collateral provided by the debtor or by the real guarantor, or the debtor’s property deposited to serve the settlement and clearing system, shall not form part of the property subject to this Law, to the extent necessary to secure the settlement and clearing operations. The Clearing Agency or the Central Intermediary shall have preferential rights over such property for a period of the two years preceding the issuance of the decision to open the proceedings for declaration of bankruptcy and for the current year.
The Clearing Agency or the Central Intermediary shall have the right to accelerate the maturities of existing contracts in respect of a debtor who has ceased to pay or is likely to cease to pay.

Section Eight – Reclamation

Article 243

Goods, securities, shares, real estate and any other property in the possession of the debtor by way of deposit, or for the purpose of being sold on behalf of their owner or delivered to him, may be reclaimed, provided that they are found in specie among the debtor’s property. Cash shall be deemed to be found in specie among the debtor’s property if it has been deposited with a financial institution in an account designated for the debtor’s clients.
If the debtor has deposited the said property with a third party, it may be reclaimed from that third party.
If the debtor has borrowed and pledged the said property as security for that loan, and the lender, at the time of the pledge, was unaware that the debtor did not own it, it may not be reclaimed until the debt secured by the pledge has been paid.
Applications for reclamation provided for in this Chapter shall be submitted to the Bankruptcy Department, accompanied by the documents evidencing the entitlement of the applicant for reclamation to his claim. The Bankruptcy Department shall notify the debtor, the creditors, the Trustee and the Bankruptcy Committee (if the indebtedness is subject to its supervision) of the application and its attachments within ten days of the date of its submission. Each of them may express his opinion on the application within ten days of the date of its submission, and the Bankruptcy Judge shall decide on the application within ten days of the date of expiry of the period specified for responding to the application.

Article 244

The price of goods, securities, shares or real estate sold by the debtor on behalf of their owner may be reclaimed if it has not been paid in cash, by a commercial paper or by set-off in a current account between the debtor and the purchaser, unless that account is designated for the debtor’s clients.

Article 245

In the cases provided for in the two preceding Articles, the reclaiming party shall pay to the Trustee the rights due to the debtor.

Article 246

If the contract of sale is rescinded by a judgment or pursuant to a condition in the contract before the issuance of a decision to open declaration of bankruptcy proceedings in respect of the buyer’s indebtedness, the seller may reclaim the goods, securities, shares or real property from the debtor’s assets if they are found in kind.
Reclamation shall be permitted even if the rescission occurs after the issuance of a decision to open the proceedings, provided that the action for reclamation or rescission was filed before the issuance of the said decision.
Applications for reclamation provided for in this Section shall be submitted to the Bankruptcy Department, accompanied by the documents evidencing the entitlement of the applicant for reclamation to his application. The Bankruptcy Department shall notify the debtor, the creditors, the Trustee and the Bankruptcy Committee, if the indebtedness is subject to its supervision, of the application and its attachments within ten days from the date of its submission. Each of them may express his opinion on the application within ten days from the date of its submission, and the Bankruptcy Judge shall decide on the application within ten days from the date of expiry of the period specified for replying to the application.

Article 247

If the decision to open declaration of bankruptcy proceedings is issued in respect of the buyer before payment of the price, and the goods are still with the seller, or the goods have not yet entered the warehouses of the buyer or the warehouses of his agent instructed to sell them, or the seller has not transferred the securities, shares or real property into the name of the buyer, the seller may retain the said assets or reclaim possession of such of them as he has relinquished possession of for the purpose of delivering them to the buyer, and rescind the contract of sale.
Nevertheless, the goods may not be reclaimed if they have lost their identity or if the debtor disposed of them before their arrival, without fraud, pursuant to the bill of ownership or the transport document. In all cases, the Trustee or the debtor may, after obtaining the permission of the Bankruptcy Judge, request the performance of the contract of sale, provided that he pays the seller the agreed price. If the Trustee does not make such a request, the seller may insist on his right to rescission and claim compensation, if warranted, and participate with it in the declaration of bankruptcy proceedings.

Article 248

If a decision to open declaration of bankruptcy proceedings is issued in respect of the buyer’s indebtedness before payment of the price and after the goods have entered his warehouses or the warehouses of his agent instructed to sell them, and likewise after the transfer of ownership of the securities, shares or real property into the name of the buyer, the seller may not request rescission of the sale or reclamation, and his preferential right in respect of the goods shall also lapse.

Article 249

Commercial papers and other papers of value delivered to the debtor for the collection of their value or for allocation to a specific payment may be reclaimed if they are found in kind among the debtor’s assets and their value had not been paid at the time of issuance of the decision to open the proceedings.
Nevertheless, reclamation shall not be permitted if the said papers are found in a current account between the applicant for reclamation and the debtor.

Article 250

Banknotes deposited with the debtor may not be reclaimed unless the claimant proves their identity. The identity of the money shall be established if it is deposited with a bank or a custodian in an account designated for the debtor’s clients. The identity of the money may be proved under this Article by all means of proof.

Article 251

Any person may reclaim from the debtor’s assets any things that he proves to be his property. If the debtor or the Trustee, as the case may be, refuses to return them, the dispute shall be referred to the Bankruptcy Court.
In all cases in which the application for reclamation is submitted after the issuance of the decision to open declaration of bankruptcy proceedings, the applicant for reclamation may not be handed what he claims except after obtaining permission from the Bankruptcy Judge.

Article 252

Neither spouse may reclaim from the assets of the other spouse the gifts which his spouse made to him during the marriage by a disposition inter vivos or one taking effect after death, nor may the creditors claim the same.

Article 253

Each spouse, whatever the financial regime adopted in the marriage, may reclaim from the assets of the other his movable and immovable property if he proves his ownership thereof, and such property shall remain encumbered with the rights lawfully acquired over it by third parties.
If the application for reclamation is submitted after the issuance of the decision to open declaration of bankruptcy proceedings, the applicant for reclamation may not be handed what he claims except after obtaining permission from the Bankruptcy Judge.

Chapter Two – Companies

Article 254

The provisions of this Law shall apply in general to preventive settlement, restructuring and declaration of bankruptcy proceedings submitted in respect of the indebtedness of companies, and the following provisions shall apply in particular.

Article 255

The manager or liquidator of a company may not submit an application to open the proceedings in accordance with the provisions of this Law except after obtaining approval therefor from the majority of the partners in a general partnership company, the majority of the general partners in a limited partnership company, the owner partner in a single person company, and the extraordinary general assembly in other companies. The approval of the Trustee shall suffice in respect of judicial composition.
The application shall include the names of the general partners at the time of submission of the application and of those who withdrew from the company after its cessation of payments, stating the domicile and nationality of each general partner and the date on which his withdrawal from the company was registered in the Commercial Register.

Article 256

If the debtor is a company and the opening of the proceedings is decided in respect of its debts, the determination of any application whose subject is the liquidation of the company or placing it under judicial receivership shall be stayed, and the legal personality of a company under liquidation shall continue until the completion of the proceedings provided for in this Law.

Article 257

The Trustee shall act in place of the company declared bankrupt in every matter in which the law requires obtaining the opinion of the bankrupt, its attendance, or the approval of its Board of Directors or its general assembly.

Article 258

Except for companies subject to preventive settlement proceedings, if any of the partners or shareholders are indebted to the company because of non-payment of the remainder of their shares in the capital or for any other reason, the Bankruptcy Judge may entrust the Trustee with pursuing the collection of such debts and representing the company in their collection, even if the company is subject to restructuring proceedings and retains the management of its assets and business.
In the event of the issuance of a decision to open declaration of bankruptcy proceedings, the Bankruptcy Judge may authorise the Trustee to claim from the partners or shareholders the unpaid amounts of their shares in the capital even if they have not yet fallen due, and the Bankruptcy Judge may order that such claim be limited to the amount necessary to pay the company’s debts.

Article 259

Securities issued by the company shall not be subject to the procedures for verification of debts, and such securities shall be admitted at their value after deducting what the company has paid of that value.

Article 260

The application to open the proceedings submitted in respect of the indebtedness of a company shall be deemed submitted at the same time in respect of the indebtedness of each of its general partners as at the date of submission of the application, in addition to the partners who withdrew from the company and remained liable for its debts.
Each indebtedness shall be independent of the others in terms of procedures, such as the verification of debts, the appointment of Trustees, the meetings of creditors, the plans submitted, the Trustees and the Supervisors, and the decisions taken and the judgments issued in each indebtedness. The assets of the company shall consist of its property, including the shares of the partners, and its liabilities shall include only the rights of its creditors. As for the general partner, his assets shall consist of his own property, and his liabilities shall include the rights of his creditors and of the company’s creditors.
If a decision to open declaration of bankruptcy proceedings against the company is issued, or the company is declared bankrupt, this shall not prevent the issuance of a decision to open preventive settlement or restructuring proceedings in respect of the partner, or vice versa. The same rule shall apply to the indebtedness of each general partner in relation to the other partners.

Article 261

The Bankruptcy Judge may deem the application to open the proceedings submitted in respect of the indebtedness of a company to be submitted in respect of the indebtedness of any person who, under the cover of that company, carried out commercial business for his own account and disposed of the company’s assets as if they were his own property. The provisions of the second and third paragraphs of the preceding Article shall apply to the case set out in this Article.

Article 262

If the company is declared bankrupt, the Bankruptcy Court may, at the request of the Bankruptcy Judge, the Trustee, the Bankruptcy Committee or any of the creditors, oblige the members of the Board of Directors or the managers, or the liquidators in liquidation proceedings conducted outside the framework of this Law, to pay an amount commensurate with the fault attributed to the person concerned, and the amount shall be used to cover the company’s debts, if it is proved that any of them committed any of the following acts during the two years preceding the company’s cessation of payments:
1. Using commercial methods whose risks have not been studied, such as disposing of goods at prices below their market value in order to obtain funds with the intention of avoiding bankruptcy proceedings or delaying their commencement.
2. Entering into transactions with a third party to dispose of assets without consideration or for inadequate consideration and without a certain benefit or one commensurate with the company’s assets.
3. Paying the debts of any of the creditors with the intention of harming other creditors.
4. If it becomes apparent after the bankruptcy of the company that its assets are insufficient to pay at least 20% of its debts, where it is proved that they were negligent in managing the company in a manner that led to the deterioration of its financial position.
The Court shall not issue its judgment provided for in this Article if the person to whom the acts set out in this Article are attributed proves that he took all the precautionary measures that an ordinary person could take to reduce the potential losses to the company’s assets and its creditors.
The action set out in this Article shall be filed within two years from the date of issuance of the judgment declaring the company bankrupt, failing which the right to file it shall lapse.
Any person who proves that he recorded his reservation on such acts in writing shall be exempt from liability for the acts provided for in this Article.

Chapter Three – Debts of Small and Medium Enterprises

Article 263

If the debtor in respect of whom an application to open proceedings has been submitted in accordance with the provisions of this Law is classified as a small or medium enterprise, in accordance with the aforementioned Law No. 98 of 2013, on the date of submission of the application, the Bankruptcy Judge may, on his own initiative or at the request of the debtor or any of the creditors, order that the time limits provided for in this Law be reduced by half, and any fraction in such time limits shall be rounded up to the nearest higher whole number.
The Bankruptcy Judge may also dispense with the formation of Creditors’ Committees or voting therein, issue his decision on the matters which the law requires to be referred to the Creditors’ Committees without the need for their approval, or grant exemption from any other procedures provided for in this Law.

Article 264

By way of exception to the provision of Article (195) of this Law, if the bankruptcy estate is closed in respect of the debtor referred to in the preceding Article, the debtor shall be entitled to submit an application to the Bankruptcy Department for his discharge from the debts remaining due from him on the date of submission of the application.
If the debt is one of the debts referred to in the second paragraph of Article (192) of this Law, the debtor’s discharge shall be within the limits of what exceeds the creditor’s share that was set aside and reserved for the creditor under that paragraph. The submission of the application shall result in the stay of all proceedings taken by the creditors to recover the remainder of the debtor’s indebtedness towards them.
The Bankruptcy Judge shall issue his decision on the application within ten days from the date of its submission, and this provision shall apply to any personal guarantees provided by the partners in the bankrupt company.

Article 265

The discharge of the debtor from debts in accordance with the preceding Article may not result in the debtor recovering assets that were subject to liquidation and distribution in accordance with the provisions of this Law in a manner that deprives the creditors who are parties to the liquidation and distribution proceedings of the full recovery of their debts.
The provision of the preceding Article shall not apply to assets on which the creditor has levied attachment up to the date of the day preceding the submission of the application for discharge from the remainder of the debt in accordance with the preceding Article, and in such case the debtor’s discharge shall apply to the amount by which the debt of the attaching creditor exceeds the attached assets.

Article 266

The debtor may not be discharged from the remainder of the debt in accordance with Article (264) of this Law in the following cases:
1. If the debt is due from him under the Personal Status Law, arises from debts due to the Public Treasury, or is secured by personal guarantees.
2. If the debtor conceals any information or documents which this Law requires him to submit, or which the Bankruptcy Judge has ordered him to submit and he refuses to submit them, or if he submits misleading documents or information.
3. If the debtor engages in any conduct that leads to delaying the proceedings provided for in this Law.
4. If the debtor has previously benefited from a discharge from debt in accordance with this Law during the six years preceding the date of closure of the bankruptcy estate in respect of which he submitted the application for discharge from the debt.
5. The issuance of a final and unappealable judgment against the debtor imposing a custodial penalty for any crime affecting the national economy or any of the crimes provided for in this Law, unless he has been rehabilitated. If the criminal action relating to any of the said crimes is still under investigation or trial, the proceedings of the application for discharge and all proceedings taken against the debtor to recover the remainder of the debt shall be stayed until a final and unappealable judgment is issued therein, and the Bankruptcy Judge may, in such case, issue such precautionary measures as he deems fit to preserve the rights of the creditors.

Part Seven – Grievances and Appeals

Chapter One – Grievances

Article 267

Any interested party may file a grievance with the Bankruptcy Judge if the debtor or the Trustee commits any of the following acts:
1- If he does not notify him to attend any of the meetings of creditors or does not make the announcement of that meeting in accordance with the provisions of this Law.
2- If he proposes a disposition, or makes a disposition, in an unfair manner that harms his interests.
3- If he neglects or fails to perform his duties or does not exercise due diligence therein in accordance with established practice.
4- If he misuses or withholds any funds or property belonging to the debtor, or breaches any obligation incumbent upon him in favour of the debtor.

Article 268

Any interested party may file a grievance with the Bankruptcy Judge if the Bankruptcy Department fails to perform any of its obligations set out in this Law.

Article 269

The grievance shall be submitted within ten days from the date on which the aggrieved party became aware of the fact that is the subject of the grievance. If such fact is subject to notification, announcement or publication in accordance with this Law, the time limit for the grievance shall begin from the date of notification of the aggrieved party or of the announcement or publication, whichever is earlier.

Article 270

The grievance shall be submitted to the Bankruptcy Department, which shall notify the Trustee, the Bankruptcy Committee, the Supervisor, and the debtor (if the grievance is submitted by another person) of the grievance within ten days from the date of its submission. Any other person whose rights may be affected by the decision issued on the grievance shall also be notified of the grievance, as determined by the Bankruptcy Judge in this regard.
Any concerned party may, within ten days from the date of his notification of the grievance, submit a memorandum to the Bankruptcy Department in reply thereto.
The Bankruptcy Judge shall issue his decision on the grievance within ten days from the date of expiry of the period set out in the preceding paragraph.

Article 271

The grievance shall not result in the stay of the proceedings unless the Bankruptcy Judge decides otherwise. The Bankruptcy Judge may require the aggrieved party to provide an in-kind guarantee or a bank guarantee issued by one of the banks operating in the State of Kuwait, or any other guarantee determined by the Judge, to secure against any damage likely to occur as a result of the stay of the proceedings.
The aggrieved party shall recover the guarantee if the grievance is decided in his favour.

Chapter Two – Appeals

Article 272

Any interested party may appeal against the decision of the Bankruptcy Judge before the Court of Appeal within one month from the date of his notification of the decision or of its publication or announcement.
Judgments issued by the Bankruptcy Court may also be appealed before the Court of Appeal within one month from the date of issuance of the judgment.

Article 273

The appeal shall be submitted to the Bankruptcy Department, which shall register it with the Court of Appeal, and the Court shall set a hearing to consider it within one month from the date of its submission.
The Bankruptcy Department shall notify the litigants of the appeal and notify the Bankruptcy Committee, if the appeal relates to an indebtedness subject to its supervision, as well as the Trustee and the Supervisor if they are not parties to the appeal, and any person whom the Bankruptcy Judge deems should be notified, within a maximum period of ten days from the date of submission of the appeal.
The Bankruptcy Committee, as the case may be, the Trustee and the Supervisor shall submit to the Bankruptcy Department a memorandum of their opinion on the appeal within ten days from the date of their notification, and any concerned party may, within the said period, submit to the Bankruptcy Department a memorandum of his defence or opinion.

Article 274

The Bankruptcy Department shall refer the appeal file and the memoranda it has received to the Court of Appeal within ten days from the date of expiry of the period referred to in the last paragraph of the preceding Article, together with a memorandum of its opinion thereon. The appeal shall not result in the stay of the proceedings or of the judgment or decision appealed against, unless the Court decides otherwise.
The judgment of the Court on the appeal shall be final and may not be challenged by any means of challenge.
Judgments issued by the Court of Appeal shall be enforced on the basis of their draft and without service, and no objection to their enforcement may be raised.

Part Eight – Offences, Penalties and Rehabilitation

Chapter One – Offences and Penalties

Article 275

The penalties provided for in this Part shall be without prejudice to any more severe penalty provided for in any other law.

Article 276

For the purposes of this Part, the following shall be deemed a manager: the chief executive officer of a joint-stock company, the managers of general partnership, limited partnership, limited liability and single person companies, and every person working for the legal person subject to the provisions of this Law who holds positions whose competence relates to the core activities of the legal person, whether he reports directly to the chief executive officer of the legal person or to the manager in the approved organisational structure of the legal person, or reports directly to the persons who report to the chief executive officer or the manager in the said organisational structure.
The Trustee, the Supervisor and the Inspector shall be deemed public officials with respect to acts for which the laws prescribe a penalty, or aggravate the penalty, if committed by a public official.

Article 277

Any debtor against whom a final judgment declaring him bankrupt has been issued, and who is proved to have committed, after his cessation of payments, any of the following acts, shall be deemed guilty of fraudulent bankruptcy and shall be punished by imprisonment for a term not exceeding five years and a fine not exceeding one hundred thousand dinars, or by either of these two penalties:
1. Concealing, destroying or altering all or some of his books with intent to harm his creditors.
2. Disposing of his assets after his cessation of payments or after becoming insolvent, where this is done with intent to place such assets beyond the reach of the creditors.
3. Embezzling or concealing part of his property with intent to harm his creditors.
4. Acknowledging debts not owed by him, or reducing his assets, with knowledge thereof, whether the acknowledgement is made in writing, orally, in the balance sheet, or by refraining from submitting papers or clarifications.
5. Obtaining the ratification of the terms of a composition by fraud.

Article 278

The chairman and members of the Board of Directors of the company, its managers, its auditors and its liquidators shall be punished by imprisonment for a term not exceeding five years and a fine not exceeding one hundred thousand Kuwaiti dinars, or by either of these two penalties, if, after the issuance of a final decision to open the proceedings against the company, they commit any of the following acts:
1. Concealing, destroying or altering all or some of the company’s books.
2. Embezzling or concealing part of the company’s assets.
3. Acknowledging debts not owed by the company with knowledge thereof, whether the acknowledgement is made in writing, orally, in the balance sheet, or by refraining from submitting papers or clarifications in their possession with knowledge of the consequences thereof.
4. Obtaining the ratification of a preventive settlement proposal, a restructuring plan or the terms of a composition by fraud.
5. Declaring what is contrary to the truth regarding the subscribed or paid-up capital, distributing fictitious profits, or seizing any of the company’s assets in the form of remuneration, where it is proved that they knew, at the time of seizing such assets, that they were not entitled to all or part of them.

Article 279

Any debtor declared bankrupt by a final judgment who is proved to have committed any of the following acts shall be deemed guilty of negligent bankruptcy and shall be punished by imprisonment for a term not exceeding two years and a fine not exceeding twenty thousand dinars, or by either of these two penalties:
1. Spending excessive amounts on his personal expenses or household expenses, if any of this was among the causes of his cessation of payments.
2. Failing to keep commercial books sufficient to ascertain the true state of his financial position, or failing to carry out the inventory required by law.
3. Refraining from submitting the information requested from him by the Bankruptcy Judge, the Trustee, the Bankruptcy Court or the Court of Appeal.
4. Paying any indebtedness contrary to the terms of the ratified preventive settlement proposal or restructuring plan, or disposing of any assets contrary to what is set out in the proposal or the plan.
5. Paying, after his cessation of payments, a debt to one of the creditors to the detriment of the others, or granting security or special advantages to one of the creditors in preference to the others, even if this was for the purpose of obtaining the approval of the required majority for a preventive settlement proposal, a restructuring plan or a composition.
6. Disposing of his goods or any of his assets or rights at a price or value noticeably below their market price or value with intent to delay his cessation of payments or the declaration of his bankruptcy, or to delay the rescission of a composition, a preventive settlement proposal or a restructuring plan, or resorting, to achieve this purpose, to unlawful means of obtaining money.
7. Spending substantial amounts on fictitious speculation beyond what his commercial business requires.

Article 280

In the event of the issuance of a final judgment declaring a company bankrupt, the members of its Board of Directors, its managers and its liquidators shall be punished by imprisonment for a term not exceeding three years and a fine not exceeding one hundred thousand dinars, or by either of these two penalties, if they commit any of the following acts:
1. Determining excessive remuneration for the members of the Board of Directors, the chief executive officer and the managers during the three years preceding the company’s cessation of payments, where this was among the causes of the cessation.
2. Failing to keep commercial books sufficient to ascertain the true state of the company’s financial position, or failing to carry out the inventory required by law.
3. Refraining from submitting the information requested by the Bankruptcy Judge, the Trustee, the Bankruptcy Court or the Court of Appeal, or deliberately submitting incorrect information.
4. Disposing of the company’s assets after its cessation of payments, where this is done with intent to place such assets beyond the reach of the creditors.
5. Paying any indebtedness contrary to the terms of the ratified preventive settlement proposal or restructuring plan, or disposing of any assets contrary to what is set out in the proposal or the plan.
6. Paying, after the company’s cessation of payments, a debt to one of the creditors to the detriment of the others, or granting security or special advantages to one of the creditors in preference to the others, even if this was for the purpose of obtaining the approval of the required majority for a preventive settlement proposal, a restructuring plan or the terms of a composition.
7. Disposing of the company’s goods or any of its assets or rights at a price or value noticeably below their market price or value, by a margin that custom does not tolerate, with intent to delay the company’s cessation of payments or the declaration of its bankruptcy, or to delay the rescission of a preventive settlement proposal, a restructuring plan or the terms of a composition, or resorting, to achieve this purpose, to unlawful means of obtaining money.
8. Spending substantial amounts on fictitious speculation beyond what the company’s commercial business requires.

Article 281

If a criminal action for fraudulent bankruptcy or negligent bankruptcy is filed, or a judgment is issued to that effect in accordance with the provisions of the preceding Articles, the preventive settlement, restructuring, declaration of bankruptcy and composition proceedings shall retain their independence from the criminal action, without being referred to the criminal court and without that court having the right to take them up, unless the law provides otherwise.

Article 282

Any Trustee who embezzles property of the debtor while administering it shall be punished by imprisonment for a term not exceeding five years and a fine not exceeding one hundred thousand Kuwaiti dinars, or by either of these two penalties.

Article 283

Any person who steals, embezzles or conceals property of the debtor with knowledge of the issuance of the decision to open declaration of bankruptcy proceedings against him shall be punished by imprisonment for a term not exceeding five years, even if he is the debtor’s spouse, ascendant or descendant, or an ascendant or descendant of the debtor’s spouse.
The Court shall, on its own initiative, order the return of the assets, and the Court may, at the request of the concerned parties, award compensation where warranted.

Article 284

Any creditor of a debtor in respect of whom a decision to open proceedings has been issued who commits any of the following acts shall be punished by imprisonment for a term not exceeding three years and a fine not exceeding thirty thousand dinars, or by either of these two penalties:
1. Fraudulently increasing his debts against the debtor.
2. Stipulating for himself, with the debtor or with another person, special advantages in return for voting in favour of the debtor in the meetings of creditors.
3. Concluding with the debtor, after the debtor’s cessation of payments, a secret agreement granting him special advantages to the detriment of the other creditors, with knowledge thereof.
The Court shall, on its own initiative, rule that the said agreements are void in respect of the debtor and any other person, and oblige the creditor to return what he obtained under the void agreement, even if the judgment is one of acquittal, and the Court may, at the request of the concerned parties, award compensation where warranted.

Article 285

Any person who, during preventive settlement, restructuring or declaration of bankruptcy proceedings, fraudulently submits fictitious debts in his own name or in the name of another person shall be punished by imprisonment for a term not exceeding three years and a fine not exceeding one hundred thousand dinars, or by either of these two penalties.

Article 286

Any debtor who commits any of the following acts shall be punished by imprisonment for a term not exceeding three years and a fine not exceeding thirty thousand dinars, or by either of these two penalties:
1- If he intentionally conceals all or some of his assets for the purpose of obtaining the approval of the required majority for a preventive settlement proposal, a restructuring plan or the terms of a composition.
2- If he intentionally enables a fictitious creditor, a creditor prohibited from participating in the proceedings, or a creditor who exaggerates his debt, to participate in the deliberations and voting, or intentionally allows him to participate therein.
3- If he intentionally omits to mention a creditor in the list of creditors.

Article 287

Any creditor who commits any of the following acts shall be punished by imprisonment for a term not exceeding two years and a fine not exceeding twenty thousand dinars, or by either of these two penalties:
1- Intentionally exaggerating the assessment of his debts.
2- Participating in the deliberations or voting while knowing that he is legally prohibited from doing so.
3- Concluding a secret agreement with the debtor granting him special advantages to the detriment of the other creditors, with knowledge thereof.

Article 288

The following shall be punished by imprisonment for a term not exceeding one year and a fine not exceeding twenty thousand dinars, or by either of these two penalties:
1- Any person who is not a creditor and who, knowing this, participates in the deliberations or voting.
2- Any Supervisor, Trustee or Inspector who intentionally gives incorrect information about the debtor’s condition, or endorses such information, or discloses information of a confidential nature that came to his knowledge by reason of his appointment as Supervisor, Trustee or Inspector in accordance with this Law.

Article 289

Any person who refuses to implement a decision issued by the Bankruptcy Judge in accordance with this Law to submit data, information or documents or to give testimony shall be punished by imprisonment for a term not exceeding one year and a fine not exceeding ten thousand dinars, or by either of these two penalties.

Article 290

If the Bankruptcy Judge decides to open preventive settlement or restructuring proceedings in accordance with this Law, any criminal proceedings taken or to be taken against the debtor shall be stayed if they arise from cases of issuing a cheque without sufficient funds in respect of cheques drawn by the debtor before the commencement of the said proceedings, and the creditor holding the cheque without sufficient funds shall be included among the creditors and his debt shall become part of the aggregate debts of the debtor.

Article 291

The effect of the stay of criminal proceedings provided for in the preceding Article shall continue until the Bankruptcy Judge decides on the preventive settlement proposal or the restructuring plan by ratifying it or refusing ratification in accordance with the provisions of this Law.
If the Bankruptcy Judge ratifies the preventive settlement proposal or the restructuring plan, this shall extend the stay of the criminal proceedings that have been commenced until the completion of the implementation of the proposal or the plan.
If the debtor obtains a decision on the completion of the implementation of the preventive settlement proposal or the restructuring plan, the Public Prosecution shall issue a decision to close the investigation, and the court shall issue a judgment that the criminal action has lapsed, and if a final and unappealable judgment has been issued in the criminal action, its enforcement shall be stayed.
The stay of the criminal proceedings shall end upon the issuance of a decision or judgment terminating the preventive settlement or restructuring proceedings or declaring them void.

Article 292

The Bankruptcy Department shall publish all criminal judgments issued in respect of the crimes provided for in this Law by the means prescribed for the publication of judgments declaring bankruptcy in accordance with the provisions of this Law.

Article 293

Upon conviction for the crimes provided for in Articles (287), (288) and (289) of this Law, the Court may rule that the convicted person be deprived of managing any company or practising any commercial activity, for a period not exceeding three years from the date of closure of the bankruptcy estate. The name of the convicted person and the penalty imposed on him shall be entered in the commercial or professional register, as the case may be, and if he is already registered, the penalty imposed on him shall be annotated.

Chapter Two – Rehabilitation of the Bankrupt

Article 294

Unless the provisions of this Chapter provide otherwise, the rights of which a person declared bankrupt was deprived under the provisions of this Law or any special laws shall be restored upon the lapse of one year from the date of closure of the bankruptcy estate.

Article 295

A judgment for the rehabilitation of the bankrupt shall be issued, even if the period provided for in the preceding Article has not lapsed, if he has paid all his debts, principal and expenses, including the part from which he was discharged.
If the bankrupt is a general partner in a company declared bankrupt, he shall not be rehabilitated unless he has paid all the company’s debts, principal and expenses.

Article 296

Rehabilitation may not be granted to a bankrupt against whom a judgment of conviction has been issued for any of the crimes of fraudulent bankruptcy except after the lapse of three years from the execution of the penalty, its pardon, its extinction by prescription, or the expiry of its term if the suspension of its execution was ordered, provided that he has paid all his debts, principal, interest and expenses, or has agreed on a composition in respect thereof with the creditors and has performed the terms of the composition.
If he has not paid his debts, rehabilitation may not be granted to him except after the lapse of ten years from the execution of the penalty or the expiry of its term if the suspension of its execution was ordered, or from its pardon, or from its extinction by prescription.

Article 297

A judgment for the rehabilitation of a fraudulent bankrupt may be issued, even if the period provided for in the preceding Article has not lapsed, in the following two cases:
1. If the bankruptcy estate is closed by the performance of the terms of the composition. This provision shall apply to a general partner in a company declared bankrupt if a composition is concluded with the partner under terms of composition specific to the partner, and the partner has performed its terms and the bankruptcy estate has been closed in respect of him.
2. If he proves that the creditors have released him from all the debts that remained due from him after the closure of the bankruptcy estate.

Article 298

Rehabilitation may not be granted to a bankrupt against whom a judgment has been issued for any of the crimes of negligent bankruptcy except after the execution of the penalty imposed, or the expiry of its term if the suspension of its execution was ordered, or its extinction by prescription.

Article 299

The bankrupt shall be rehabilitated after his death at the request of one of the heirs, and the time limits provided for in Articles (294) to (297) of this Law shall be calculated from the date of death.

Article 300

If one of the creditors refuses to receive his debt, or is absent, or his place of residence cannot be ascertained, the debt may be deposited in the court treasury, and the deposit receipt shall, with respect to rehabilitation, be deemed a quittance.

Article 301

The application for rehabilitation shall be submitted to the Bankruptcy Department, accompanied by the documents supporting it, and the Bankruptcy Department shall send the application, within ten days from the date of its submission, to the Public Prosecution and to the Commercial Register Department for entry in the register.
It shall also, within the same period, notify the creditors whose debts were admitted in the bankruptcy estate of the application for rehabilitation, and a summary of the application shall be published in the Official Gazette at the expense of the bankrupt. The said summary shall include the name of the bankrupt, the date of issuance of the judgment declaring bankruptcy, the manner in which the bankruptcy estate was closed, and a notice to the creditors to submit their objections, if warranted.

Article 302

The Public Prosecution shall, within ten days from the date of its receipt of a copy of the application for rehabilitation, submit to the Bankruptcy Department a report containing information on the type of bankruptcy, the judgments issued against the bankrupt for bankruptcy crimes or the trials or investigations under way against him in this regard, and its opinion on the application.

Article 303

Any creditor who has not recovered his right may submit an objection to the application for rehabilitation within ten days from the publication of the summary of the application in the Official Gazette, and the objection shall be made by a written report submitted to the Bankruptcy Department, accompanied by the documents supporting it.

Article 304

The Bankruptcy Department shall, within ten days from its receipt of the reply of the Public Prosecution, refer the application file and the objections to the Bankruptcy Court, accompanied by a report of its opinion on the application, and the Court shall set an urgent hearing to consider the application, of which the creditors who submitted objections shall be notified.

Article 305

The Court shall decide on the application for rehabilitation by a final judgment. If the Court rejects the application, it may not be submitted again except after the lapse of one year from the date of issuance of the judgment.

Article 306

If, before the application for rehabilitation is decided, investigations are conducted with the bankrupt concerning any of the bankruptcy crimes, or a criminal action is filed against him in that respect, the Public Prosecution shall notify the Bankruptcy Court immediately.
The Court shall stay the determination of the application for rehabilitation until the completion of the investigations or the issuance of a final judgment in the criminal action.

Article 307

If a judgment of conviction for any of the bankruptcy crimes is issued against the bankrupt after the judgment for his rehabilitation, the latter judgment shall be deemed never to have existed.
The bankrupt may not thereafter obtain rehabilitation except in accordance with the conditions provided for in Articles (294) to (297) of this Law.

Article 308

The issuance of the judgment for rehabilitation shall result in the bankrupt recovering his political rights and the removal of all restrictions on his civil capacity to acquire rights, assume obligations and hold public office, and the bankrupt shall, in terms of capacity, return to the status he was in before his cessation of payment of his debts.

Issued on 21 October 2020 and published in the Official Gazette Kuwait Al-Youm on 25 October 2020.