DUBAI/KHOBAR, Saudi Arabia (Reuters) – Saudi Arabia’s cupboard has approved a bankruptcy law, assets acquainted with the problem stated on Sunday, giving a boost to efforts to make the kingdom greater engaging to buyers.
Modern financial disaster law no longer currently exists in Saudi Arabia, developing problems for struggling companies to restructure debt with creditors since the 2009 global financial disaster and, greater these days, the dip in oil prices.
The kingdom is embarking on an in-depth power to overtake its economy – which includes updating outdated legal guidelines – because it seeks to create an investor-friendly climate to push through a multi-billion greenback pipeline of asset sales which include the preliminary public providing of Saudi Aramco, predicted to be the sector’s biggest public share sale.
“The timing is superb,” stated Bader al-Busaies, dealing with the partner at Al Suwaiket and Al Busaies regulation company.
“Lots of agencies are going through economic difficulties. Before it was both liquidation or stakeholders needed to inject cash. The new regulation is an opportunity answer – the international practice has demonstrated that insolvency regulation gives a terrific solution for corporations.”
King Salman recommended the bankruptcy regulation after the cabinet accepted it, the assets stated, mentioning a report dated closing week.
The Ministry of Commerce and Investment did not receive a response to a request for comment, and it changed into now not clean whilst the regulation might be promulgated and take effect.
In December, Saudi Arabia’s Shura Council, a top advisory body to the government, permitted a draft of the regulation, which consisted of 231 articles in 17 chapters. It regulated financial disaster processes inclusive of settlements and liquidation, for individuals and neighborhood and overseas groups, in keeping with a government statement at the time.
No information on the framework of the regulation has not begun been released. Still, an in advance draft version created a provision whereby approval of a debt restructuring deal may be executed if thirds of lenders permitted the plan.
That may help remedy existing distressed debt disputes, including one confronted by using Ahmad Hamad Algosaibi and Brothers (AHAB), a local conglomerate that currently has two-thirds of creditors’ aid for its debt concept.
AHAB and some other business enterprise, Saad Group, defaulted in 2009 in Saudi Arabia’s biggest financial meltdown, leaving international and nearby banks and different creditors owed approximately $22 billion.
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