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Bankrupt firms, individuals need to repay their creditors in Oman
October 19, 2019 | 9:16 PM
by Times News Service
 
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Muscat: Individuals and companies that declare bankruptcy in Oman need to pay back their creditors — in a manner that will be agreed through a payment restructuring plan — as part of the new Bankruptcy and Insolvency Law that will come into effect in 2020.

Under this law, which was issued under Royal Decree number 53/2019 and will come into effect on July 1, 2020, those who have borrowed money from people but are unable to return, need to pay it back as part of restructuring, which has been agreed upon by the bankrupt individual or company as well as those from their creditors. This restructuring plan must be agreed upon by both the bankrupt party and their creditors, and must be ratified by a court of law.

In this context, Mohamad bin Rashid Al Badi, the acting director of the Legal Department at the Ministry of Commerce and Industry (MoCI), said: “The aforementioned bankruptcy law allows the debtor to request a protective settlement if his financial business is disturbed which would lead to the suspension of payment of his debts and his heirs may also apply for protective reconciliation if they decide to continue trading.

“The competent court shall set forth the reasons for the disturbance of the financial work, along with the proposals for reconciliation and the guarantees of their execution. All supporting documents shall be enclosed in the application,” he said. “Considering the request for protective reconciliation, the court may order taking of precautionary measures regarding the funds of the debtor. The court shall take necessary measures to take note of the financial situation of the debtor and the reasons for its disturbance.”



“The aforementioned bankruptcy law also grants the right of every trader to file for bankruptcy, in case he stops paying his commercial debts following the disruption of his business activities,” he explained.

“A bankruptcy case shall not arise except by a court ruling without which the cessation of the payment of debts shall have no effect, unless the law provides otherwise.” Al Badi explained that “should a bankrupt individual pass away while still in a state of bankruptcy, his financial state will pass to his heirs, who can request for the same concessions that were provided to the individual in question.”



“The inheritors of the debtor have the right to apply the same request one year from the date of the debtor’s death, provided that the company is not in the process of liquidation, and the debtor continues to manage his funds during the implementation phase of the restructuring plan, and remains responsible for any obligations or contracts arising prior to or after the date of the adoption of the restructuring plan,” said Al Badi.

“The heirs of the debtor may, in accordance with the provisions of the bankruptcy law, file for bankruptcy after the death of the debtor.” Al Badi said: “In order to settle the dispute between the creditor and the debtor, the competent department must hold mediation sessions regarding the restructuring requests submitted to it by the debtor in the presence of the parties to the dispute or an authorised representative, in order to settle the dispute between the creditor and the debtor.”

“Ministry officials may meet with the parties involved in the dispute or their agents and take such action as it may deem appropriate to bring points-of-view in order to reach a binding settlement agreement for the parties. The competent department shall refer to the restructuring plan after the approval of the signatories and the competent court, in which case the plan shall be binding between the parties. However, those who claim bankruptcy under false pretences will be punished according to the law.”

“The court may impose a fine of not less than OMR200 and not more than OMR500 if the trader falsifies their claims of bankruptcy. The summary of the judgment shall be published in the Official Gazette at the debtor’s own expense,” explained Al Badi.

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