What Is Liquidation and Who May Request It?
In brief: Liquidation is used to collect and sell bankruptcy assets and distribute the proceeds to creditors under a trustee's management. The debtor, a creditor or the competent authority may apply, subject to the statutory conditions.
What is Liquidation?
Liquidation is a bankruptcy procedure in which a trustee inventories and sells the bankruptcy assets and distributes the proceeds among creditors according to statutory priorities.
What is the purpose of this procedure?
To realise the debtor's assets and distribute the proceeds fairly and efficiently to creditors under the supervision of the court and trustee.
Who may use this procedure and when?
The debtor, a creditor or the competent authority may apply. A creditor's debt must meet the applicable minimum threshold, currently SAR 50,000.
When the procedure may be used:
- When the debtor is distressed or bankrupt and rehabilitation is not appropriate.
- When a creditor meets the statutory debt and notice requirements.
What are the main stages?
File the application
An eligible party files the liquidation application with the Commercial Court.
Court decision
The court reviews the statutory requirements and decides whether to commence liquidation.
Inventory and claims
The trustee inventories assets and receives and verifies creditor claims.
Sale and distribution
Assets are sold and the proceeds distributed according to statutory priorities.
Frequently asked questions about Liquidation
The debtor, a creditor or the competent authority may apply, subject to the statutory conditions.
The applicable minimum debt is SAR 50,000.
A licensed bankruptcy trustee manages the procedure under court supervision.
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.