The Ministry of Commerce, Industry and Investment Promotion (MoCIIP) has issued Ministerial Decision 250/2023, specifying a fee of RO 10 for restructuring requests from businesses that defaulted on the payment of their debt.
In a statement, the Ministry noted that the Bankruptcy Law enables indebted firms to restructure their businesses while committing to settle their outstandings. The Law sets guidelines for the collection of proceeds from indebted merchants who have defaulted on their debt repayments. It takes into account the rights of creditors while also seeking to prevent protracted and time-consuming litigations.
The importance of issuing the Bankruptcy Law also lies in enhancing the confidence of local and international investors, strengthening the economy forward, and enabling the financial reorganization of troubled establishments, to overcome their financial difficulties, settle all debts and honour obligations, without disrupting production.
Asila bint Salem al Hussainiya, Head of the Commercial Establishments Control Department at the Ministry, commented: “The Bankruptcy Law was issued by Royal Decree 53/2019 on July 7, 2020, effectively annulling Chapter 5 of the Commercial Law issued by Royal Decree 55/90. The Law include a set of rules and provisions regulating the declaration of bankruptcy by the merchant, while initiating proactive that would help them emerge from their financial and administrative turmoil after paying debts and reconciling with creditors in accordance with the restructuring plan.” It calls for the appointment of an arbitrator between the debtor merchant and the creditors to avoid declaring bankruptcy based on a request submitted by the debtor merchant in what is called ‘protective composition’.
She clarified that the provisions of the Bankruptcy Law are applicable to everyone who carries out a commercial activity in their names and have the necessary wherewithal. It also includes commercial organisations, foreign businesses or branches or agencies operating in Oman that have not yet declared bankruptcy in a foreign country. Not included in this coverage are organised licensed by the Central Bank of Oman and the insurance companies.
Asila stressed that the restructuring can take place place in various ways, including reaching an agreement to secure a grace period for settlement of debts, or forgiveness of part of the debts, or both.
Applicants for restructuring must include proposals for emerging from their financial or administrative challenges, and commitments to their obligations or contracts that arise from these proposals.
Further, the applicant must eschew any actions that affects the interests of the creditors, such as engaging in business unrelated to the licensed activity, donating assets or borrowing or lending, or using the assets for mortgage purposes, or any other acts that violate the terms of the restructuring plan.
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