Bankruptcy Law

Requirements for Submitting of Administrative Liquidation Application for Companies and Merchants.

Since the administrative liquidation application is submitted to the commercial court by the debtor if they are insolvent—meaning their assets are insufficient to cover the costs of liquidation proceedings—or for the liquidation of small debtors- the acceptance of the debtor’s administrative liquidation application depends on the availability of the formal requirements and necessary documents stipulated under the Bankruptcy Law, its Implementing Regulations, and the Information and Documents Regulations.

It is worth noting that the required documents include the following: a summary of the business activity and a copy of its license, if any. a copy of the Articles of Association (if a legal entity) and any amendments thereto, if available, Proof that the debtor is insolvent, The debtor’s financial information, a list of the debtor’s liabilities, a list of the debtor’s assets, statement of the employees, their monthly wages, and the total wages, an approval decision from the competent authority to register the administrative liquidation application, if the debtor is an organized entity, a statement of lawsuits, legal proceedings, judgments, and enforcement instruments related to the entity, along with supporting documents, Proof that the proceeds from the sale of bankruptcy assets are insufficient to cover the costs of liquidation, proceedings or the liquidation of small debtors (small debtors being those whose debt value is less than two million SAR), Proof that the continuation of the debtor’s business is likely impossible, including an explanation of the impact of any pandemics, emergencies, or lawsuits on the financial position, and whether the business could continue once such impacts are removed, a statement of the debtor’s transactions carried out within the 24 months preceding the application.

It should be noted that once the application for liquidation is registered before the court, all claims against the debtor are suspended, This means suspension of the right to initiate or continue any action, transaction, or lawsuit against the debtor, their assets, or the guarantor of the debtor’s debt,.And any action in violation of this shall be null and void until the date of the court’s judgment rejecting the application or terminating the procedure.