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2020-02-02

Enabling Bankruptcy Trustees to Exercise Their Powers Granted Under the Bankruptcy Law and Its Executive Regulations

The Saudi Central Bank issued this circular to direct operating banks to fully enable bankruptcy trustees to access debtor bank account information, execute transactions, and manage accounts during financial reorganization or liquidation. The directive mandates banks to immediately suspend claims and freeze orders against debtors upon receiving trustee requests or official court notifications, adhering strictly to specified suspension periods and applicable banking rules. Banks are further required to verify trustees' court-granted authorities, comply with liquidation account opening and transaction suspension rules, and implement these measures across all branches effective immediately.

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In the Name of Allah, the Most Gracious, the Most Merciful

Saudi Central Bank (SAMA) Headquarters Banking Policy Department No.: 41039914 Date: 08/06/1441 AH Attachments: None

Circular

To: Respected Banks, Peace, mercy, and blessings of Allah be upon you.

Subject: Enabling Bankruptcy Trustees to Exercise Their Powers Granted Under the Bankruptcy Law and Its Executive Regulations.

The Bank has received a letter from the Minister of Justice No. (419350705) dated 14/05/1441 AH, referencing the Bankruptcy Law issued by Royal Decree No. (M/50) dated 28/05/1439 AH, and the Executive Regulations issued by Council of Ministers Resolution No. (622) dated 24/12/1439 AH, as well as the Minister's request to direct concerned parties to fulfill requirements submitted by certain specialized departments handling bankruptcy cases. Reference is also made to a letter from the President of the Commercial Court in Riyadh No. (411055362) dated 20/03/1441 AH regarding the difficulties faced by bankruptcy trustees when exercising their powers under the aforementioned Bankruptcy Law and Executive Regulations.

In light of the role of banks in complying with relevant systems and regulations, the Bank emphasizes the importance of the following:

  1. Enabling bankruptcy trustees to obtain any information or take actions concerning the debtor's bank accounts, such as bank statements or inquiries regarding balances and transactions, in cases where the debtor is undergoing financial reorganization or liquidation. Additionally, the trustee may execute transactions and manage the debtor's bank accounts if the debtor's funds are solely under liquidation.
  2. Suspending claims against the debtor and refraining from taking any action or measure against them or their assets upon the Bank's receipt of a suspension order via the bankruptcy trustee or through official notification channels, including measures based on rulings and decisions issued by execution courts and competent courts, such as deduction and transfer orders from bank accounts. The Bank shall adhere to the suspension period if specified in the ruling, and shall not lift the suspension on claims unless it receives a formal decision to do so.

P.O. Box 2992, Riyadh 11169 | Telegram: MARKAZI | Fax: 404400 | Tel: 4633000 | Fax: 4662414

Saudi Central Bank (SAMA) Headquarters Banking Policy Department No.: Date: Attachments: Correspondence Date:

  1. The Bank is responsible for implementing the requirements in paragraphs (1) and (2) from the time it receives these requests from the bankruptcy trustee (including requests directed to branches), or immediately upon learning of the ruling issued for the debtor through official notification channels, without being prevented from implementing them in cases where prior or subsequent court rulings or decisions notifying the Bank of a freeze on the debtor's bank accounts or prohibition against dealing with them exist.
  2. Complying with the provisions of Rule No. (300-1-7) of the Bank Accounts Rules, which include the controls and procedures for opening bank accounts for liquidation purposes according to the time period specified in paragraph (13) of Rule No. (100), and refraining from executing any freeze or enforcement measures on this category of accounts, whether due to prior freeze orders notified to the Bank via the Institution regarding the bank accounts of a debtor subject to liquidation procedures, or upon receiving a subsequent freeze request for the debtor's bank accounts.
  3. Complying with the provisions of Rule No. (10-2-1) of the Bank Accounts Rules, which mandate suspending transactions related to the debtor's accounts upon the commencement of any liquidation or administrative liquidation procedures, if the Bank is aware or receives an official notice from the competent authority, with account management handled by the liquidation trustee or bankruptcy committee as determined by a decision of the competent court.
  4. Verifying the powers granted to the trustee by the court ruling issued by the competent court, and in accordance with the aforementioned Bankruptcy Law and its Executive Regulations.

For information, implementation, and compliance from the date hereof, and notification to all concerned branches and departments.

Yours sincerely, Fahd bin Ibrahim Al-Shathri Acting Deputy Governor for Supervision

Distribution Scope:

  • Banks and financial institutions operating within the Kingdom.

P.O. Box 2992, Riyadh 11169 | Telegram: MARKAZI | Fax: 404400 | Tel: 4633000 | Fax: 4662414

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