The role of the Officeholder in the new Saudi Bankruptcy law.
Pursuant to Art. (1) of the new Saudi Bankruptcy law, an Office Holder is the person whoever appointed by the Court or an applicant – as the case may be – to perform the tasks and duties entrusted to him in accordance with the type of procedure. This shall include the Financial Restructuring Officeholder and the Liquidation Officeholder.
Commercial law jurists identify the Officeholder as a person appointed by the court which decided on Bankruptcy case, which has the jurisdiction for supervising Bankrupt affairs and the procedures taken by the creditors’ trustee and is entitled to identify debts submitted by creditors.
Thus, there are differences between the repealed Saudi bankruptcy law and the current Saudi Bankruptcy law. Under the repealed law the Officeholder does not have competence unless adjudication in bankruptcy is rendered, while under the current law the Officeholder has competence even in the domain of Preventive Settlement procedures.
Preventive Settlement phase:
Pursuant to Art. (17) Upon applying for the commencement of a Preventive Settlement procedure, the debtor may request the Court to order a Moratorium, provided that the debtor request must be accompanied with a report signed by an Officeholder, registered in the Officeholder’s List stating that, in his opinion, the Preventive Settlement Proposal will likely be approved by the majority of the Creditors and is capable of being implemented.
Based on the above provision, it is evident that the function of the Officeholder within the preventive settlement procedures is similar to the function of the expert witness.
The Financial Restructuring:
According to sub-clause (50) (1) of the Saudi Bankruptcy law the Court shall appoint an Officeholder among those listed in the list of Officeholders’ List. The applicant for the commencement of the Financial Restructuring Procedure may suggest to the Court the name of the Officeholder that he desires to be appointed among those on the list.
Additionally, sub-clause (50) (2) states that the financial capabilities, qualifications of the Officeholder and those of his team must be considered for the appointment of the Officeholder.
Finally, Art. (57) provides that the Officeholder shall supervise the activity of the Debtor during the Financial Restructuring Procedure period to verify the fairness of the Procedure and implement the Plan in such way as to ensure speed of performance and provide the necessary protection to the interests of those affected by the procedure in accordance with the provisions of the Law.
Hence, on the basis of those provisions, it is notable that the function of the Officeholder within the procedures of the financial restructuring is somewhat close to the function of the Receiver.
In accordance with article (100) of the Saudi Bankruptcy law: “1. The Debtor shall cease to manage its activities immediately upon appointment of an Officeholder. 2. The Officeholder shall replace the Debtor in the management of its activities and in the fulfillment of the Debtor’s regulatory duties during the procedure. The Officeholder shall not be held liable vis-a-vis third parties for the actions taken in such capacity. 3. Any act taken by the Debtor over any of the Bankruptcy Assets after the appointment of the Officeholder shall be considered null and void. The Court may order the recovery of said Bankruptcy Assets from third parties or as it deems appropriate, taking into account the rights of third parties (good faith). The person suffering from any harm may file a claim for compensation 4. The Officeholder shall notify the Debtor of any summons, notice or order issued against him by the Court or any other Competent Authority.”
In line with this article, we think the function of the Officeholder in connection with liquidation procedures is somewhat close to the function of the liquidator.