Like much of the world, residents in the Kingdom of Saudi Arabia currently live under social distancing measures and government lockdowns. As a result, many businesses, particularly in the retail, food & beverage, entertainment, travel and hospitality sectors, are experiencing unprecedented drops in revenue, which in turn is placing incredible pressure on their cash flows and operations.
While the Kingdom has announced a multibillion-riyal financial assistance programme to help the private sector in this difficult time, it is likely, if not inevitable, that many businesses in the Kingdom will need to consider whether they can remain as a going concern. It is fortunate, therefore, that the Kingdom in 2018 (1439H) adopted the Bankruptcy Law (the BL) and its Implementing Regulations (the BLIR), which were designed to help businesses establish workouts/restructuring plans. Indeed, it is among the stated aims of the BLIR to enable "Distressed Debtors ... to restructure [their] financial position and maintain [their] activities with an aim to contribute to the economy and support it."
This note addresses the applicability of the BL and the BLIR to persons in the Kingdom and considerations for businesses that are approaching, or already in, a distressed situation.
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.