Introduction to bankruptcy lawsuit Proceedings Under Kuwaiti Law
Kuwait’s modern bankruptcy framework, established by Law No. 71 of 2020, revolutionizes insolvency resolution. A bankruptcy lawsuit (دعوى الإفلاس) is initiated when a debtor fails to pay debts to multiple creditors, triggering court-supervised restructuring or liquidation. This law prioritizes business rescue while protecting creditors’ rights.
When Is Bankruptcy Declared? (Article 131)
A court may declare bankruptcy if:
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Payment Default: Merchant ceases settling commercial debts on due dates.
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Liquidity Crisis: Financial distress severely impacts solvency.
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Business Suspension: Operations halt, rendering debt repayment impossible.
Who Can File a Bankruptcy Lawsuit?
| Party | Legal Basis | Requirements |
|---|---|---|
| Debtor | Article 606 | Merchant/company experiencing payment default due to financial disruption. |
| Creditors | Article 14 | ≥3 creditors with undisputed debts meeting regulatory thresholds. |
| Regulatory Authorities | General Provisions | To enforce compliance and protect stakeholders. |
Critical Filing Requirements
For Debtors (Article 13):
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File within 2 months of payment default or awareness of insolvency.
For Creditors (Article 14):
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Debts must be:
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Commercial, non-disputed, and monetarily quantifiable.
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Unpaid for ≥30 days post-formal demand.
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Step-by-Step Bankruptcy Lawsuit Procedure
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Initiation: Submit lawsuit to Court of First Instance (المحكمة الكلية).
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Documentation: Attach:
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Principal commercial ledgers
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Personal expense statements (last 3 years)
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Balance sheets and profit/loss reports
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Detailed asset/debt inventory with valuations
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Creditor list with guarantees
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Commercial license copies
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Records of ongoing litigation
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1-year liquidity forecasts
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Proof of court deposit payment
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Court Review:
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Verification of documents (10-day respondent notification).
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Ruling: Bankruptcy declaration, dismissal, or interim measures.
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Role of Kuwait’s Bankruptcy Administration
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Oversight: Judge-led committee processes applications.
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Key Functions:
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Validates legal compliance
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Publishes rulings
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Appoints asset trustees
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Freezes enforcement actions
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Conducts creditor meetings
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Summons debtors/third parties for testimony
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How Al-Subaie Legal Group Supports Your Bankruptcy Lawsuit
With 150+ commercial cases handled, we provide:
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Strategic Filing: Precision in lawsuit drafting/documentation.
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Debt Restructuring: Negotiation of rehabilitation plans.
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Creditor Defense: Protection against unlawful claims.
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Compliance Safeguards: Risk mitigation at all stages.
Contact: 50766923
FAQs: Bankruptcy Lawsuits in Kuwait
Q: What distinguishes Kuwait’s 2020 Bankruptcy Law?
A: It emphasizes business continuity – restructuring over liquidation to maximize creditor recovery.
Q: Can foreign companies file bankruptcy lawsuits in Kuwait?
A: Yes, foreign branches registered locally qualify under Article 1.
Q: How long do proceedings take?
A: Typically 3-6 months for initial rulings; complex cases may extend to 1 year.
