A lack of modern bankruptcy regulations had created difficulties for struggling firms seeking to restructure debt with creditors since the 2009 global financial crisis and the more recent dip in oil prices.
Monday 28, October 2019 BY KUDAKWASHE MUZORIWA
World Bank Senior Research Director said that the merit of Saudi Arabia's new bankruptcy law, part of efforts to help the Kingdom attract investors, should become clearer in about a year after courts handle initial cases.
Legislation introduced in 2018 is part of broader efforts by the Saudis to overhaul the economy of the world's top oil exporter to attract foreign investment, create employment and wean off the economy from reliance on hydrocarbons.
Simeon Djankov, World Bank Senior Research Director and Founder of the Doing Business Report, said that the Kingdom have started on insolvency, the law was been passed and now investors are eager to see whether the courts actually understand how to implement it.
Only three cases were settled using Saudi Arabia’s bankruptcy law and around a dozen more, which are expected to be resolved over the next year, should provide enough evidence to evaluate the law's success.
Resolving insolvency was an area of improvement for Saudi Arabia, climbing 30 places to 62nd in the World Bank report which showed a sharp improvement in other Gulf countries.
The two main open cases involve conglomerates Saad Group, owned by indebted billionaire Maan al-Sanea, and Ahmad Hamad Algosaibi and Brothers (AHAB), which defaulted on about $22 billion in combined debt in 2009, reported Reuters.