What Is Administrative Liquidation and When Is It Used?
In brief: Administrative liquidation applies when the proceeds expected from selling the debtor's assets are insufficient to cover the costs of ordinary or small-debtor liquidation. The debtor or competent authority may apply.
What is Administrative Liquidation?
Administrative liquidation is a procedure managed by the Bankruptcy Commission for estates whose assets are not expected to generate enough proceeds to cover liquidation costs.
What is the purpose of this procedure?
To deal efficiently with low-asset estates where an ordinary liquidation process would not be economically viable.
Who may use this procedure and when?
The debtor or competent authority may apply when the debtor is distressed or bankrupt, or when the assets are insufficient to cover liquidation costs.
When the procedure may be used:
- When the debtor is distressed or bankrupt.
- When the debtor's assets are insufficient to cover ordinary or small-debtor liquidation costs.
What are the main stages?
Assess the assets
Determine that expected asset proceeds will not cover liquidation costs.
File the application
The debtor or competent authority applies to the Commercial Court.
Commission management
The Bankruptcy Commission manages the administrative liquidation.
Sale and closure
Available assets are realised and the procedure is concluded under the statutory rules.
Frequently asked questions about Administrative Liquidation
It addresses estates whose asset proceeds are unlikely to cover the costs of ordinary liquidation.
The debtor or the competent authority may apply when the statutory conditions are met.
The Saudi Bankruptcy Commission manages administrative liquidation.
Source: Saudi Bankruptcy Law, its Implementing Regulations and Bankruptcy Commission guidance — Bankruptcy Commission. This content is for general information and does not constitute legal advice.