A new bankruptcy law in Saudi Arabia will help companies in need of debt restructuring. The legislation was approved earlier this month, according to Reuters. It is not known when the bankruptcy law will become effective, however. This comes just weeks after Egypt passed a new bankruptcy law.
Official details of the new plan have not been released, but the draft consisted of 231 articles in 17 chapters, noted Reuters. The news outlet also stated debt restructuring approval would take at least two-thirds of creditors signing off on the deal.
The new law was adopted in part due to the global financial crisis nearly 10 years ago that left creditors without payments. Ahmad Hamad Algosaibi and Brothers (AHAB) and Saad Group defaulted during the crisis, and creditors and banks are owed roughly $22 billion. Two-thirds of AHAB creditors have approved a debt restructuring proposal, said Reuters.
The new law will have “structural reforms to further facilitate a dynamic business environment that encourages participation—a critical variable in further developing the entrepreneurial ecosystem, investments, and so much more,” said Saudi Arabia spokesperson Fatimah S. Baeshen on Twitter.
-Michael Miller, managing editor