Understanding bankruptcy in Saudi Arabia: A new era of financial restructuring

In recent years, Saudi Arabia has taken major steps to modernise its legal and economic frameworks, aligning them with international best practices. One significant development has been the introduction of a comprehensive Bankruptcy Law, marking a new era in how businesses and individuals deal with financial distress in the Kingdom. This law not only brings clarity and structure to insolvency proceedings but also aims to foster a more investor-friendly environment and support economic resilience.

Table of contents
The need for a modern bankruptcy framework
Key features of the Saudi Bankruptcy Law
Who can file for bankruptcy?
Protection and transparency
Monthly insights

The need for a modern bankruptcy framework
Historically, Saudi Arabia lacked a unified legal system for managing bankruptcy. The absence of clear procedures created uncertainty for creditors, businesses, and foreign investors alike. In 2018, the government responded by enacting the Saudi Bankruptcy Law (Royal Decree No. M/50), which came into effect in August of that year. The law was designed to provide fair, transparent, and efficient mechanisms for debt resolution, in line with Vision 2030’s goals of economic diversification and improved business confidence.

Key features of the Saudi Bankruptcy Law
The Bankruptcy Law introduces several important tools for dealing with insolvency, including three core insolvency procedures:

• Preventive Settlement | إجراء التسوية الوقائية: Allows a debtor to propose a plan to restructure debt before defaulting, enabling early intervention.
• Financial Restructuring| إجراء إعادة التنظيم المالي: Focuses on reorganising a business’s financial obligations while continuing operations, overseen by a licensed trustee.
• Liquidation| إجراء التصفية: If recovery isn’t possible, assets are sold off to pay creditors in an orderly and fair manner.

Importantly, the law also establishes the Bankruptcy Commission, an independent regulatory body that oversees the application of the law and the licensing of trustees and experts.

Who can file for bankruptcy?
Both individuals and legal entities can initiate bankruptcy proceedings in Saudi Arabia. Creditors also have the right to file a claim against a debtor, provided specific conditions are met. This opens the door for a more balanced relationship between debtors and creditors, promoting accountability and fairness on both sides.

Protection and transparency
One of the core objectives of the law is to protect all stakeholders - debtors, creditors, employees, and investors. The law places a strong emphasis on transparency, public announcements, and judicial oversight, ensuring that all parties are treated equitably and that the process is clearly documented.

Monthly insights
The introduction of the Bankruptcy Law represented a forward-looking shift in Saudi Arabia’s legal and financial landscape. For businesses, investors, and professionals operating in the Kingdom, understanding how bankruptcy works is essential to navigating financial challenges and opportunities alike.

Diligencia’s monthly insights provide a detailed view into Saudi Arabia’s evolving bankruptcy landscape, offering a breakdown of the companies listed under the Kingdom’s three core insolvency procedures. These public listings offer rare visibility into corporate distress —enabling creditors, investors, and business partners to monitor financial stability, manage exposure, and make informed strategic decisions.

Monthly insights - August 2025 bankruptcy listings
Monthly insights - July 2025 bankruptcy listings
Monthly insights - June 2025 bankruptcy listings
Monthly insights - May 2025 bankruptcy listings

Diligencia helps customers from around the world to find essential information on organisations registered in Africa and the wider Middle East, drawing on primary sources that are otherwise hard to find. Using our curated data, we enable our clients to effectively manage their compliance obligations, allowing them to continuously monitor their suppliers and counterparty risks in the MEA region.