Companies Controller Dr. Wael Al-Armouti said, “64 local companies have resorted to the Insolvency Law since its implementation began in late 2018, in an attempt by these companies to restore their economic activity and address their financial difficulties.”
Al-Armouti explained that these companies that resorted to the insolvency law operate in multiple economic sectors in the fields of industry, trade and services, stressing that the law focuses on supporting economic activity by supporting struggling companies and enabling them to continue their work, which positively impacts the stability of employment and the preservation of capital and shareholders’ rights.
Insolvency Law No. 21 of 2018 defined insolvency as: “The debtor’s cessation or inability to pay his debts due regularly, or when his total financial obligations exceed his total assets.”
If a company resorts to the insolvency law, the department refers the insolvent company to the competent courts, which in turn appoint an insolvency trustee for the insolvent company. His tasks include developing a plan to address the company’s debts to third parties in agreement with all creditors within a specific timeframe, and a work plan that guarantees the creditors or shareholders in the company.
Al-Armouti reiterated that the main objective of implementing this law is to rectify the situation of companies and ensure their continued presence in the market, while preventing them from reaching the stage of liquidation and final exit from economic activity.
According to Al-Armouti, the companies that resorted to the insolvency law are distributed as follows: 3 public shareholding companies, 5 limited liability companies, 10 partnership companies, and one private shareholding company, while the rest of the cases were for individual institutions.
Regarding the procedures for the workflow in the insolvency stages, Al-Armouti explained that the law authorizes the competent courts to appoint an insolvency trustee for each company, who is responsible for preparing a plan to address the financial challenges it faces, in a way that guarantees the rights of all concerned parties, provided that the implementation is carried out according to a specific timetable.
He noted that companies’ reliance on the law resulted in three success cases, which were represented in the adoption of reorganization plans for struggling companies operating in the fields of cement manufacturing, finance and car leasing, reflecting the effectiveness of legal procedures in supporting business continuity.
Al-Armouti pointed out that the number of licensed insolvency agents reached 45 agents, including 38 males and 7 females, noting that the Insolvency Agents Committee made amendments to the regulations governing the insolvency agents exam, which contributes to raising the level of technical and administrative efficiency of applicants, and strengthening the requirements for granting practice licenses.
It is noted that the law defines an insolvency agent as: “A natural or legal person licensed to practice the work of an insolvency agent as stipulated by law, provided that he has a university degree in economics, business administration, law, accounting or engineering, and has practical experience of no less than five years in his field of specialization, in addition to obtaining the necessary license in accordance with the provisions of the applicable system, and that he has no connection with the debtor or a work relationship or any other relationship that may affect his impartiality, and that he has not been convicted of a felony or misdemeanor that violates honor or public morals and ethics.”
Al-Armouti stressed the department’s commitment to continuing to implement awareness programs and campaigns targeting the economic and service sectors, to familiarize them with the law and the mechanisms for benefiting from it, through specialized dialogue sessions and workshops.