Under what circumstances is bankruptcy mandatory by law? - Q&A - Legal Advice Middle East

Question

Q: Under what circumstances is bankruptcy mandatory? How many years of losses and what amount of losses can lead to bankruptcy? A: The court issues a judgment declaring the debtor bankrupt and liquidating his funds if the debtor is the applicant for the bankruptcy procedures and acted in bad faith…

Mariam Jumaa Alhammadi · Accepted Answer

Cases in which the court decides to declare the debtor bankrupt in the course of restructuring his business according to the request submitted by him regarding the opening of bankruptcy procedures, or the request submitted by the creditor or all creditors: - The First Case: The court issues a judgment declaring the debtor bankrupt and liquidating his funds if the debtor is the applicant for the bankruptcy procedures and acted in bad faith or if the application submitted by him intended to procrastinate or evade financial obligations. - The Second Case: If the restructuring procedures are not suitable for the debtor based on the data and documents submitted with the application or what was stated in the expert’s report, where the expert’s report includes a statement showing the possibility of restructuring the debtor and whether his funds are sufficient or insufficient to cover the restructuring costs. - The Third Case: If one of the two majorities stipulated in Article (107) of this Decree-Law is not achieved, which is the majority of the creditors whose debts have been finally accepted and the creditors whose debts have been temporarily accepted and who are authorized to vote on the approval of the draft restructuring plan. - The Fourth Case: It is the case in which the court decides to refuse to approve the restructuring plan according to the text of Article (109) of this Decree-Law. - The Fifth Case: It is the case in which the court rules the invalidity of the procedures or the annulment of the restructuring plan, whereby the procedures are invalidated if, after the approval of the restructuring plan, a judgment is issued convicting the debtor of one of the crimes stipulated in Chapter Six of this Decree-Law, except for the case in which the court decides otherwise. This is to protect the interest of the creditors.

Questions & Answers