Bankruptcy Provisions in The Qatari Legislations.

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Bankruptcy is a legal process that is initiated when an individual or corporation is unable to repay their existing obligations. The bankruptcy procedure begins with a petition filed either by the debtor or on behalf of creditors. All of the debtor’s assets are valued and assessed, and the assets may be utilized to repay a portion of the debt. Bankruptcy allows an individual or business to restart by waiving unpayable debts and enabling creditors to seek repayment based on liquidated assets. In the State of Qatar, Bankruptcy provisions are regulated in both Law No. 27 of 2006 Promulgating the Trading Regulation Law and Law No. 11 of 2015 Promulgating the Commercial Companies Law. Articles relevant to bankruptcy in both Laws will be introduced and explained briefly in this article.

Bankruptcy in the Trade Law (Law No. 27 of 2006 Promulgating the Trading Regulation Law):

Bankruptcy is regulated in the 6th and last part of the Trade Law starting from article (606) and until the last article of the Law – article (846) –, it is divided into six chapters as follows:

  • Chapter One: Declaration of Bankruptcy and its Effects (606-675)
  • Chapter Two: Administration of Bankruptcy (676-732)
  • Chapter Three: End of Bankruptcy (733-779)
  • Chapter Four: Rehabilitation of the Bankrupt (780-791)
  • Chapter Five: Preventive Composition (792-833)
  • Chapter Six: Bankruptcy Offences (834-846)

To start with, there are certain conditions identified by the law for individuals to be eligible for the declaration of bankruptcy; an individual must be considered as a “Merchant” as per the provisions of this Law, stopped and are unable to pay their debts and whose financial affairs are unstable and consisting a threat to their creditors’ rights. Bankruptcy may only be declared by a court decision. However, there are no bankruptcy courts that are exclusively dedicated to this purpose. The procedure can be started by a variety of parties, including the merchant, a creditor, or the court. The merchant willing to be declared bankrupt must submit an application to the designated court. The application must contain documents that clarifies the merchant’s financial status and his debts amounts and creditors, documents relevant to the aforementioned application are explicitly stated in the Law.

Bankruptcy effects the individuals declared bankrupt in many aspects, examples of these effects are:

  • They are banned from voting, holding office in the Shura Council, Central Municipal Councils and the Chamber of Commerce.
  • They cannot be managers, directors, or members of any company’s management board.
  • They are restricted from business operations.
  • Debtor transactions undertaken after payments terminated but before bankruptcy was declared may be disallowed or clawed back.

For Further Information about Bankruptcy in Qatar, don’t hesitate to contact any of our professionals at Alhababi Law Firm!

Author: ‘Mohammad Mufid’ Ratib Qurashi

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