Kuwait Sets in Motion Far-Reaching Bankruptcy Law, with New Court Set up to Handle Disputes

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The executive regulations of the Bankruptcy Law approved by Kuwait's National Assembly a year ago were enforced as of Saturday, meaning 80,000 debtors breathed a sigh of relief as no more arrest warrants will be issued against them, Gulf News reported. The new law abolished Article 292 of the Procedure Code and does not treat failure to pay debt as a criminal offense, unless it is fraudulent. It also allows bankruptcy to be avoided either by a settlement with creditors or a restructuring plan to increase protection for troubled businesses and provides two new options to affected entities before they are forced to declare bankruptcy. With the exception of joint venture companies and collective investment schemes, the Bankruptcy Law specifies the persons to whom the provisions of the law apply (which includes every natural person, trader, Kuwaiti companies and branches of foreign companies). The Bankruptcy Law gives the Central Bank of Kuwait and the Capital Markets Authority the right to set out rules governing preventive settlement procedures, restructuring and bankruptcy for stock exchanges, clearing agencies, central depository entities, central brokers, banks and insurance companies, in a manner that may deviate from the Law and in accordance with the requirements of the nature of these entities. Read more.