Insolvency Law at Oman
Oman's insolvency framework is primarily governed by Royal Decree No. 53/2019, known as the Bankruptcy Law, which came into effect on 7 July 2020. This law superseded the relevant provisions of the Commercial Law (Royal Decree No. 55/1990) and introduced significant reforms to modernize and streamline insolvency and restructuring procedures in Oman. (Oman Bankruptcy Law [Lexis® Middle East], Changes to the bankruptcy and restructuring legal framework in Oman – The In-House Lawyer)
⚖️ Key Features of Oman's Bankruptcy Law
1. Scope of Application
The Bankruptcy Law applies to:
Merchants, including both natural and legal persons engaged in commercial activities.
Foreign companies operating in Oman through branches or commercial agents, with certain exceptions.
Central Bank of Oman-licensed companies and insurance companies are excluded and remain subject to their own specific regulations. (Changes to the bankruptcy and restructuring legal framework in Oman – The In-House Lawyer)
2. Insolvency Procedures
The law provides three main procedures for dealing with insolvency:
Restructuring: A consensual process initiated by the debtor, aiming to agree on a restructuring plan with creditors under the supervision of the Ministry of Commerce, Industry and Investment Promotion.
Preventative Composition: A court-supervised process where a composition trustee assists the debtor in negotiating with creditors to reach a settlement and avoid bankruptcy.
Bankruptcy: A formal court procedure initiated when other options fail, leading to the liquidation of the debtor's assets. (Oman Bankruptcy Law)
3. Restructuring Process
The restructuring process involves:
Debtors applying within six months of financial difficulties.
Involvement of a committee of experts to develop a restructuring plan.
Court approval of the plan, making it binding for all parties.
Implementation of the plan within a period not exceeding five years. (Oman Bankruptcy Law)
4. Preventative Composition
This procedure allows debtors to seek relief from financial difficulties by:
Submitting an application to the court.
Engaging in negotiations with creditors under the supervision of a composition trustee.
Achieving a settlement that may include extending payment periods or reducing debt amounts.
Suspending legal proceedings and enforcement actions by creditors during the process. (Oman Bankruptcy Law)
5. Bankruptcy Procedure
When restructuring or preventative composition are not viable, the bankruptcy procedure includes:
Court appointment of a liquidator.
Safeguarding and liquidating the debtor's assets.
Publication of the bankruptcy judgment in the Official Gazette.
Resolution of creditor claims. (Oman Bankruptcy Law)
6. Creditor Priorities
In bankruptcy proceedings, debts are settled in the following order of priority:
Salaries of employees.
Government dues and taxes.
Preferred or secured creditors.
Unsecured creditors. (Bankruptcy Proceedings in Oman - BSA LAW, Bankruptcy Proceedings In Oman - Insolvency/Bankruptcy - Oman)
7. Discharge and Reinstatement
A bankrupt individual may be discharged from bankruptcy if:
All debts are fulfilled.
A final list of debts is prepared.
The court is satisfied with the liquidation process. In cases of fraudulent bankruptcy, discharge is not permitted. (Oman Law Blog: An Overview of the Insolvency Regime under Omani Law, Bankruptcy Proceedings In Oman - Insolvency/Bankruptcy - Oman)
🏛️ Legal Framework
Bankruptcy Law (Royal Decree No. 53/2019): Primary legislation governing insolvency procedures.
Commercial Law (Royal Decree No. 55/1990): Superseded provisions related to insolvency.
Commercial Companies Law (Royal Decree No. 18/2019): Regulates company dissolution and liquidation.
RELATED Blog
0 comments