Bankruptcy reforms ‘will spur Saudi Arabian investment’

•Saudi Arabia will introduce its first comprehensive bankruptcy law on Aug. 18 •The new rules have been drawn up to offer protection to creditors LONDON: Saudi Arabia will introduce its first comprehensive bankruptcy law on Aug. 18 in a move designed to encourage foreign and domestic investment in private business, experts say. The move is also seen as providing a boost for competitiveness and jobs, and to help pave the way for the transfer of knowledge and skills as part of a drive to modernize the economy. Based on internationally recognized insolvency standards, the new rules have been drawn up to offer protection to creditors such as banks, as well as stricken companies that seek to wind up their affairs in an orderly manner, thereby shielding themselves from arbitrary seizure of their assets. “The new regulations will offer lenders, firms and their executives peace of mind and spur overseas investment in the private sector,” said Dario Najm, an associate in the corporate and M A practice at BSA Ahmad Bin Hezeem Associates LLP in Riyadh. In an interview with Arab News, he said that until now there had been little in the way of “procedural clarity” in the way bankruptcies have been handled in KSA. But this was vital to generate confidence and “bring in foreign direct investment that will help to expand the private sector in line with Vision 2030, and refashion the economy.” It would generate confidence that a formal system was in place to liquidate companies that had run into trouble, or allow them time to recover by arranging a debt-repayment schedule. www.arabnews.com