Sultanate Of Oman’s Bankruptcy and Insolvency Law will come into effect from July 2020. The law is aimed at helping struggling companies get out of financial rigmaroles after having paid off debts and settling disputes with creditors as per a restructuring plan, according to an official from Oman’s Ministry of Commerce and Industry (MoCI).
“The debtor, who has stopped paying his debts can apply to the Audit and Control of Commercial Establishments Department, Ministry of Commerce and Industry, to request restructuring through settling the disputes with the creditors, provided that the debtor continues his business during the two years preceding the filing of the application, and that no final judgment has been issued against him to declare bankruptcy,” said Mohamad bin Rashid al Badi, Acting Director of Legal Department at the MoCI.
Debt Inheritance Rules
As per the new law, the debtor’s inheritors have the right to apply for the same request during one year from the date of the debtor’s death, provided that the company is not in the process of liquidation, and the debtor continues to manage his funds during the implementation phase of the restructuring plan and remains responsible for any obligations or contracts arising prior to or after the date of the adoption of the restructuring plan.
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Competent Department’s roles
As part of the restructuring requests submitted to it by the debtor, mediation sessions between the creditor and the debtors will be held by the competent department at MoCI. This will be done in the presence of parties to the dispute or an authorised representative in order to settle the said dispute. The department may also take such action as it may deem appropriate to bring points of view in order to reach a binding settlement agreement for the parties. The competent department shall refer the restructuring plan after the approval of the signatories to the competent court for approval, in which case the plan shall be binding between the parties.
Protective Settlement
The law also gives debtor the levy to request a protective settlement if his financial business is disturbed, which would lead to his suspension of payment of his debts and his heirs may apply for protective reconciliation if they decide to continue trading. The competent court shall set forth the reasons for the disturbance of the financial works, the proposals for reconciliation and the guarantees of their execution. Considering the request for protective reconciliation, the court may order the taking of precautionary measures on the funds of the debtor.
Filing for Bankruptcy
Every trader has the right to file for bankruptcy, in case he stops paying his commercial debts following the disruption of his business activities. A bankruptcy case shall not arise except by a court ruling without which the cessation of the payment of debts shall have no effect unless the law provides otherwise. The heirs of the debtor may, in accordance with the provisions of the Bankruptcy Law, file for bankruptcy after the death of the debtor. The court may impose a fine if the trader fakes bankruptcy.
