BDO Saudi Arabia helps businesses, shareholders and creditors understand and navigate bankruptcy procedures under the Saudi Bankruptcy Law, from protective settlement and financial restructuring to liquidation and administrative liquidation.

Formal bankruptcy procedures may become necessary where a consensual restructuring cannot be achieved, where statutory protection is required to create time for a restructuring or where an orderly process is needed to preserve or realise value.

Where a consensual solution remains achievable, it may offer a faster and less disruptive route. Where it does not, understanding the available statutory procedures, their implications and the requirements for commencement becomes critical.

The Saudi Bankruptcy Law and its implementing framework provide different procedures depending on the debtor's financial position and circumstances. The appropriate route affects how the business is managed, the role of creditors and the court, the protection available during the process and how value may ultimately be preserved or realised.

Protective settlement

Restructure obligations with creditors while management remains in control of the business.

Protective settlement is designed to help a debtor experiencing, or expecting to experience, financial difficulty reach an agreement with creditors while continuing to manage its business.

It may be appropriate where the underlying business remains viable and financial pressure can potentially be addressed through an agreed compromise with creditors.

Compared with financial restructuring, the debtor retains a greater role in managing the procedure. The process therefore requires careful preparation of the settlement proposal, financial forecasts and supporting information provided to creditors.

Financial restructuring

Use a structured, court-supervised process where a more comprehensive restructuring of the business and its obligations is required.

Financial restructuring is intended to help a financially distressed or bankrupt debtor restructure its business where there remains a realistic opportunity for the activity to continue.

The procedure gives a greater role to creditors and the court than protective settlement. An appointed officeholder supervises the debtor during the process and assists with preparation of the restructuring proposal.

Claims against the debtor are suspended upon commencement of the procedure or registration of the commencement request, subject to the applicable requirements. This can create the framework needed to negotiate and implement a more comprehensive restructuring.

Liquidation

Manage the orderly realisation of assets where continuation of the business is no longer viable.

Liquidation may be appropriate where the debtor's activity cannot realistically continue and the focus moves from restructuring the business to maximising the value realised from its assets and distributing proceeds to creditors in accordance with the applicable legal framework.

The procedure is administered by an appointed officeholder who manages the liquidation process, including the treatment of creditor claims, asset realisation and distribution of proceeds.

Administrative liquidation

A statutory route where available assets are not expected to cover the costs of a standard liquidation procedure.

Administrative liquidation applies where the debtor's activity cannot continue and the available bankruptcy assets are not expected to be sufficient to meet the expenses of liquidation or the small debtors' liquidation procedure.

Unlike an ordinary liquidation, the administrative liquidation procedure is administered by the Saudi Bankruptcy Commission following commencement by the court.

How BDO Saudi Arabia helps

Choosing a bankruptcy procedure requires both an understanding of the legal framework and a realistic assessment of the debtor's financial position, liquidity, viability and stakeholder interests.

Procedure and options assessment – Assessing the financial position and helping clients understand which restructuring or bankruptcy routes may be relevant and what each option means in practice.

Financial analysis and forecasting – Preparing and assessing cash flow forecasts, financial information and restructuring scenarios required to support decision-making and proposed procedures.

Restructuring proposal support – Supporting the financial and commercial development of restructuring proposals and the information required for the process.

Debtor advisory – Supporting businesses as they assess, prepare for and progress through relevant bankruptcy procedures.

Creditor advisory – Helping lenders and creditors assess restructuring proposals, financial information, potential recoveries and the implications of available options.

Valuation and realisation strategy – Assessing businesses, assets and potential realisation strategies where valuation or disposal forms part of the restructuring or liquidation process.

Stakeholder and process support – Supporting engagement with relevant stakeholders, appointed officeholders, the Bankruptcy Commission and the Commercial Courts as required during the process.

Why work with BDO Saudi Arabia?

Bankruptcy decisions require more than an understanding of the available procedures. Stakeholders need reliable financial analysis, realistic restructuring scenarios and a clear view of how each option may affect liquidity, business continuity and recoveries.

With BDO, clients gain:

Saudi restructuring experience – Our team works within the Saudi restructuring and bankruptcy environment, helping clients understand the financial and commercial implications of the procedures available under the Bankruptcy Law.

Financial analysis behind the procedure – We assess liquidity, forecasts, viability and restructuring scenarios so decisions are supported by a clear understanding of the underlying financial position.

Support for debtors and creditors – Our experience across different stakeholder perspectives helps businesses, lenders and creditors assess proposals and understand the implications of available options.

Restructuring and valuation capabilities – We combine restructuring expertise with access to valuation and corporate finance specialists where business value, asset realisation or a transaction forms part of the solution.

Practical stakeholder support – We help clients organise the financial information, analysis and restructuring proposals needed to engage effectively with creditors and other parties throughout the process.

International capabilities – Through the global BDO network, clients can access restructuring expertise in other jurisdictions when financial distress or creditor relationships extend beyond Saudi Arabia.

Bankruptcy Procedures