Overview
The Saudi Bankruptcy Law offers a company several paths, from preventive settlement aimed at reorganizing the company before its crisis worsens, to full liquidation when continuing operations is no longer viable.
Early intervention is preferable in these matters, since more flexible options remain available to a company seeking to restructure before it reaches a stage of complete inability to pay.
Regulatory Basis
This area draws on the Bankruptcy Law and its implementing regulations, which set out preventive settlement, financial reorganization, and liquidation procedures.
Formal bankruptcy proceedings are heard before the competent court, and typically involve appointing a trustee or supervisor depending on the procedure followed.
How Restructuring Proceeds
The process begins with a careful assessment of the company's actual financial position, including the scale of obligations and available assets, to determine whether negotiated restructuring is a realistic option.
If restructuring is possible, we negotiate with creditors on a revised repayment plan preserving business continuity, rather than escalating directly to formal bankruptcy proceedings.
Who Needs This Service
A company facing difficulty meeting its obligations that needs an honest assessment of its regulatory options before the situation worsens further.
A creditor of a struggling company that needs representation protecting their rights within restructuring or formal bankruptcy proceedings.
A board needing to understand their potential personal liability if the company continues normal commercial dealings despite clear knowledge of serious financial distress.
Common Mistakes
Waiting until the company reaches complete inability to pay before seeking advice, when early intervention opens more flexible and less costly restructuring options.
A board continuing normal commercial dealings despite clear knowledge of serious financial distress, which may expose members to personal liability in certain cases.
Cost and Fees
An initial financial position review is priced as a fixed fee, with fees for negotiating restructuring or representation in bankruptcy determined after understanding the scale of obligations and number of creditors involved.
We give a candid assessment of expected cost against the benefit sought from each path, so the client decides with a clear financial picture from the start.
We also help assess options for protecting specific assets a company considers essential to continuing its operations, even during restructuring proceedings, rather than treating all assets with the same level of negotiating flexibility with creditors.
Additional Considerations
When negotiated restructuring doesn't succeed, this connects with our liquidation and company dissolution service as an organized final option.
For board members needing to understand their personal exposure during a distress period, this connects with our corporate governance and compliance service.
Common Questions
When should we seek advice when facing financial difficulty?
As early as possible, since early intervention opens more flexible restructuring options compared to waiting until the financial crisis worsens.
Do board members carry personal liability for a company's distress?
This can occur in certain circumstances, particularly if the board continues normal commercial dealings despite clear knowledge of serious financial distress, and we review this exposure specifically.
Is liquidation the only option for a struggling company?
No, other options exist like preventive settlement and negotiated restructuring, assessed based on the company's actual financial position.