Insolvency law: The objectives and the mechanisms

December 17, 2019

Insolvency Law No. 9 of 2019 enters into force from January 2020, which is the year of economic and social betting on development and aspiration for a happier and more stable country. What is the role of the insolvency law in this context? Contrary to the federal bankruptcy law, the insolvency law includes civilians who are not merchants whose financial difficulties have prevented them from paying their debts and discharging their financial receivables – the insolvency law has set out clear and easy-to-apply rules for collecting bad debts and rehabilitating the financial position of the debtor, which increases the credibility of creditor banks in loaning individuals, and encourages. According to the third article of the insolvency law, which requires commencement of procedures, the debtor shall submit to the court an application without contesting anyone in it, to settle his/her financial obligations, provided that the required documents are attached to the application. Protective and penal measures Opening insolvency proceedings, does stop the claims? The law stipulated that during the insolvency and liquidation procedures, it is not permissible to initiate or pursue any lawsuits or take legal or judicial measures against the debtor, as the issuance of the decision to open the insolvency and liquidation procedures entails stopping the entitlement of legal or contractual benefits to the debtor, including the interest due, or compensation due for late payment, and the cessation of any judicial action against any person who granted a personal guarantee to the debtor, or transferred his/her money as a guarantee of the debtor’s obligations, pending the issuance of a judgment to liquidate the debtor’s money, within the limits of that guarantee. Penal procedures If the court decides to initiate procedures for settling financial obligations, or commences insolvency and liquidation procedures, it orders, on its own initiative or at the request of the debtor, to suspend any penal procedures if they arise from cases of issuing a check without balance for checks issued by the debtor before requesting the commencement of procedures settlement of financial obligations, or prior to the request to open insolvency procedures and liquidation of funds. Measures against the debtor and penalties against the creditor The law has been misled by the debtor, with the intent to harm the insolvency and liquidation procedures, in a way that prevents the secretary appointed by the court from performing his duties in accordance with the provisions of this law. In the event that it becomes apparent to the court after the debtor’s insolvency decision and the liquidation of his/her funds, that any debtor’s money has not been disclosed, then it may include that money in the debtor’s liquidated funds, then the court may take the necessary measures against the debtor if he/she commits any of the acts or the following actions: fleeing outside the country to avoid or postpone the payment of any of its debts, avoid, postpone, disable the insolvency procedures or liquidate his/her funds,  dispose of any of his/her funds with the aim of preventing the Secretary from possessing it or delaying possession thereof, as well as hiding or destroying any of his/her funds, documents or other relevant information […]

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