Oman: Bankruptcy Proceedings In Oman

Although there is no separate bankruptcy law in Oman, both the Commercial Code of 1990 and the Commercial Companies Law of 1974 provide a framework for the bankruptcy of traders and liquidation of insolvent companies. Under the laws of Oman, bankruptcy of a person must be declared by the Court. Article 579 promulgates that, "Every merchant who faces difficulties in his financial activities and suspends payment of his commercial debts may be adjudicated as bankrupt. The suspension of payment of the debt shall prove the difficulties faced in the activities unless it is proven otherwise."

When an insolvent person declares bankruptcy, the interests of that person will cease to accrue on the debts. Upon the declaration of bankruptcy, debts should be settled in the following order of priority:

  1. salaries of employees;
  2. government dues and taxes;
  3. preferred or secured creditors;
  4. unsecured creditors

The Commercial Companies Law sets out the grounds for dissolution or liquidation of a company. The declaration of bankruptcy of a company is one of the grounds for its dissolution. As a result of being declared bankrupt, a company must be liquidated and struck off the Commercial Register. The court will usually appoint a liquidator for effecting the transfer of the company's remaining assets. The liquidation is usually effected by way of judicial sale or public auction. In accordance with the Law of Commerce, after being declared bankrupt, the company is required to surrender the management of all assets to the appointed administrator in bankruptcy. Bankruptcy does not have the immediate effect of vitiating, or automatically terminating, those contracts that were entered into by the bankrupt prior to his or her declaration of bankruptcy. Any contract entered into by the bankrupt before the date of declaration of bankruptcy remains valid and continues to exist although certain obligations under those contacts may become suspended by reason of bankruptcy. Commonly, commercial contracts include the right to termination for a party in case the other party under the contract is declared bankrupt.

Speaking about the effect of bankruptcy on employees, Oman Labor Law states that the liquidation, insolvency or bankruptcy and final authorized closure of an employer is valid ground for termination of the employment contract by that employer. What is the effect of bankruptcy on parties to a contract? Generally, a contract counterparty is not responsible or liable to third parties, including employees of the other party, if the other party to the contract becomes bankrupt. Any obligation of the bankrupt party towards its employees remains with that party. It is important to consider the situation within which the contract is terminated and if the counterparty would like to replace the bankrupt party with another contractor.
Book 5 – Chapter 3 of the Commercial Code of Oman sets out various provisions relating to the Termination of the Bankruptcy.

The court after preparing the final list of the debts may end the bankruptcy upon the bankrupt's request if he has fulfilled all the debts owed. However, the Court shall not rule the end of the bankruptcy for the absence of the creditors' interest, unless after perusal of the liquidator's report. The report should state that one of the two conditions has been satisfied such as, proving the bankrupt debtor has fulfilled all the debts of the creditors or he has deposited at the liquidator, the amounts necessary for the fulfilment of the said debts, such as assets, revenues and expenses. As soon as the debtor meets these conditions the bankruptcy shall be ended immediately upon issuance of the judgment and he shall recover all his rights. No judicial composition shall be concluded with a bankrupt who is guilty of fraudulent bankruptcy. The conviction of a default bankrupt shall not prevent composition to be concluded with him.

In a situation where the bankrupt is guilty of fraudulent bankruptcy or default bankruptcy he/she shall only be discharged according to the provisions of Omani Penal Law. If the bankrupt is a joint partner in a company adjudicated bankrupt, he shall only be discharged after fulfilling all the company's debts within a period not exceeding three years, even if the said partner has come to a different arrangement with his creditors. If one of the creditors refrained from collecting his debt, was absent or his address is unknown, the debt may be deposited at the Treasury of the Court. The deposit certificate will replace the discharge.

Once deceased, the bankrupt shall be discharged, at the request of one of the heirs, according to the provisions set in Chapter 3. The discharge application shall be submitted along with the supporting documents to the Court that issued the judgment of adjudication of bankruptcy. The Court shall immediately send a copy of the application to the Penal Prosecution Authority and to the Secretariat of the Commercial Register for publication thereof. The Court shall also notify the creditors whose debts were accepted in the bankruptcy of the discharge application. The summary of the application shall be published in the Official Gazette at the expense of the bankrupt and it shall include the name of the bankrupt, the date of issue of the judgment of adjudication of bankruptcy, the method of end of bankruptcy and a warning for the creditors to submit their objections, if required.

Every creditor has a right to submit an objection to the discharge application within one month from the date of publication of the summary application in the Official Gazette. The objection shall take the form of a written report to be submitted to the Secretariat of the Court and must be accompanied with the supporting documents. The Court may then decide to suspend the discharge application by issue of a final judgment. If the Court rejects the application, it cannot be submitted again until one year from the date of issue of the judgment.

When deciding upon the discharge application, investigations are carried out to determine if one of the bankruptcy crimes or a penal lawsuit was filed against bankrupt debtor, the Penal Prosecution Authority must notify the Court immediately. Therefore, the Court shall suspend the settlement of the discharge application until the completion of investigations or issuance of the final judgment in the penal lawsuit. All the rights forfeited from the bankrupt will be returned to him after the expiry of five years from the date of end of bankruptcy except in cases of fraudulent bankruptcy or default bankruptcy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions