What Is Preventive Settlement for Small Debtors?
In brief: This simplified procedure enables a debtor whose total debts do not exceed SAR 2 million to reach an agreement with creditors through an efficient, lower-cost process while retaining management of the business.
What is Preventive Settlement for Small Debtors?
It is the preventive settlement procedure adapted for small debtors. A debtor is treated as a small debtor when total debts at commencement do not exceed SAR 2 million.
What is the purpose of this procedure?
To help a small debtor reach an agreement with creditors quickly through a simplified, efficient and lower-cost process.
Who may use this procedure and when?
The small debtor issues the commencement decision using the approved form. The decision takes effect when it is deposited in the Bankruptcy Register.
When the procedure may be used:
- When the debtor's total debts at commencement do not exceed SAR 2 million.
- When the small debtor needs an early agreement with creditors while continuing to manage the business.
What are the main stages?
Confirm the threshold
Confirm that total debts do not exceed SAR 2 million.
Issue the decision
The small debtor issues the commencement decision using the approved form.
Deposit the decision
The decision becomes effective when deposited in the Bankruptcy Register.
Reach an agreement
The debtor proceeds toward a settlement with creditors within the simplified framework.
Frequently asked questions about Preventive Settlement for Small Debtors
A debtor whose total debts at commencement do not exceed SAR 2 million.
The small debtor issues it using the approved form, and it takes effect after deposit in the Bankruptcy Register.
Yes. The debtor retains management while seeking an agreement with creditors.
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.