Saudi Arabia approves bankruptcy law

The Kingdom continues to push forward with its economy diversification

The Saudi government has approved a bankruptcy law that will make investing into the Kingdom more appealing to foreign investors.

Until now, modern bankruptcy legislation hadn’t existed in Saudi Arabia, which has prevented companies from facing financial issues to restructure their debt with creditors.

The announcement comes as part of a wider plan for Saudi Arabia to diversify its economy away from oil by promoting opportunities for foreign investment and growing the private sector.

Previously companies who were facing financial difficulties only had two options: liquidation or stakeholders had to inject money. The new law brings an alternative solution – the international practice has proven that insolvency law offers a good solution for companies.

King Salman has endorsed the bankruptcy law after the cabinet approved but it has not been announced when the law would be promulgated and take effect.