Saturday 20 / April / 2024
Muscat: Residents and citizens of Oman who are short on assets and finding it difficult to fund themselves and their families can claim bankruptcy legally under the law.
In a series of articles about Oman’s rules and regulations, entitled “Know Oman”, experts guide readers on their rights and responsibilities while working and living in Oman.
Speaking exclusively to the Times of Oman, representatives of Al Faqih & Co., one of the leading law firms in Oman, explained the process involved in filing for bankruptcy.
**media[960064]**
“Unlike other countries where several alternatives are available, the bankruptcy of a merchant must be declared by the Court under the laws of Oman.
“Article 579 of the Law of Commerce (Royal Decree 55/1990) states that any merchant whose financial affairs are in disorder and who thus ceases payment of his commercial debts may be declared bankrupt.
“The suspension of payment of the debt will prove the difficulties faced in the activities unless it is proven otherwise,” said Ali Bin Omar Al Faqih, Founder & Managing Partner, Al Faqih & Co.
“Under the current legislative framework, bankruptcy proceedings are triggered either by the application of a creditor or upon the application of the merchant-debtor (organisation or person who owes commercial debts), and the court may of its own motion adjudge a merchant-debtor, who is unable to pay financial debts, bankrupt,” Al Faqih added.
Yasin Chowdhury, another expert of the law firm, said that the law provides similar protection to a creditor whose commercial debt is yet to become due and entitles such a creditor to apply for the declaration of the bankruptcy of a debtor in certain specific circumstances.
“This could include a situation where the debtor has no known domicile or has absconded, or has closed the relevant business. Also, if the debtor has initiated the liquidation proceedings in relation to his business or has engaged in dealings which are detrimental to his creditors,” Chowdhury explained.
“The application for declaration of bankruptcy should be made by a statement submitted to the Registry of the Court that should mention the reasons for the cessation of payment.”
In order to proceed, the person will need to attach certain documents with the statement so the case can be taken into consideration, according to the expert.
“The applicant needs to attach the principal commercial books, a copy of the last balance sheet and of the profit and loss account, a statement of personal expenditure for the three years preceding the making of the application along with a detailed statement of the immovable and moveable property owned and the approximate value thereof on the date of cessation of payment and a statement of the protests for non-payment made against the merchant during the two years preceding the making of the application,” Chowdhury said.
He added that a statement as to the names of the creditors and the debtors, their domicile, the number of their entitlements or their debts, and the securities securing the same must also be attached with the statement.
“After an application has been submitted, the Commercial Court may order the taking of measures necessary to preserve or administer the assets of the debtor until it makes its decision on the declaration of bankruptcy,” he said.
“One of the consequences of a judgment declaring bankruptcy is that the Court appoints an administrator to preserve and deal with the assets of the bankrupt.
“Following the court order, the bankrupt will have to relinquish in favour of the administrator the management of all his assets, including assets that come to his ownership while he is in a state of bankruptcy. “This does not apply, however, to earnings and certain other assets that a judge considers commensurate with the need of the person who’s bankrupt to support himself and his family,” Chowdhury said.
* Al Faqih & Co.([email protected]) is a premier commercial law firm based in Muscat consisting of barristers, consultants, and advocates with vast experience in corporate and commercial practice including labour and employment law in Oman.
The objectives of the firm are inter alia to provide a full spectrum of corporate and commercial legal services to a variety of clientele in an efficient, effective and timely manner. It has specialisation in banking & finance, international trade, litigation & arbitration, shipping & aviation, private equity, and foreign investment laws.
