Rehabilitation of Bankrupted: A Juridical Comparative Study of the Saudi System

(Ahmed bin Abdullah Al Shuaibi)

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Abstract

Bankruptcy adversely affects the eligibility of bankrupt declared person to engage in commercial activities since his financial assets will not be at his disposal. This study explains Islam’s viewpoint on the process of rehabilitating bankrupted persons as compared with the Saudi Arabia system practice regarding this issue. Rehabilitation is defined as “removing all the effects that result from declaring someone bankrupt”. Many studies on this topic ignored Islamic jurisdiction on this problem. The present study aims to present the Islamic Juridical provisions relating to bankruptcy. This study used deductive and analytical approaches to investigate the terminology used, what has been said about the issue, the evidence presented, and the systems and procedures related to bankruptcy rehabilitation. The study concluded that Islamic Jurisdiction does not put commercial debt as the only condition for declaring bankruptcy, nor does it stipulates that the bankrupt be a practicing merchant, as stated in the studied bankruptcy system. It also revealed that Islamic jurisdiction is restricted to due debt rather than undue debts. Furthermore, bankruptcy is declared when creditors or some of them ask for payment while undue debts or credits are not payable by /or to the bankrupted. The study also concluded that a bankrupted person cannot grantee others. A creditor testimony in favor of a bankrupt individual is not accepted due to any possible interest. Furthermore, announcing bankruptcy is possible to warn people. Rehabilitation and elimination of these previous effects came after the end of bankruptcy status without any need of a court ruling if no debts remains. However, if some debts remained unpaid, court ruling is needed to decide whether to end bankruptcy status or not. Key Words: Bankruptcy, Debt, Judiciary, Jurisprudence, System.
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