(NEN) Al-Wagyan & Al-Saif Law Firm, organized a forum about “Restructuring and financing of companies in GCC countries”. The forum took place on Monday, 05/10/2009 at JW Marriot Hotel.

Many legal and financial experts spoke about the main legal developments in this field and cases where the companies’ officers should look for solution to their problems namely in light of the current world financial crisis. During the forum, legal experts saw a great need for the review of the current bankruptcy laws in Kuwait in light of the latest impact imposed by the crisis. They also stated that laws regarding bankruptcy and incapacity of payment in Kuwait are outdated and do not reflect the modern forms of work.

The partner of Al-Wagyan & Al-Saif Law Firm, Attn. Najeeb Al-Wagayan declared that the Kuwait bankruptcy law was set forth under the Kuwaiti Commercial Law No 68 of the year 1980 where the fourth book of the Kuwaiti commercial law discusses bankruptcy, the procedures, conditions and consequences thereof in facing creditors and contracts concluded with third parties prior to adjudicating bankruptcy. He pointed out that any company can adjudicate bankruptcy in the event where its financial works were negatively affected thus obliging it to suspend the payment of its debts. The said law stipulated the conditions subject to which the companies may adjudicate bankruptcy namely the suspension of debts payment.

Al-Wagayan also stated that meeting the conditions required to adjudicate bankruptcy is sufficient to consider the company as bankrupt; therefore, a legal judgment shall be rendered in this regard by the competent court and stated that the company’s partner shall not have the right to file a request for bankruptcy. Al-Wagayan revealed that the request for bankruptcy shall be filed in the same manner as lawsuits. In summary, the request may be submitted in a petition to the head of the Court of First Instance. It shall include evidence as to why the company suspended the payment and reasons behind the summary. He added that other reasons may lead to the bankruptcy of the company and its incapacity to fulfill its obligations such as credits exchanges between customers and suppliers within work channels inside a certain sector. This matter applies for main industries that encompasses a network of diverse relations and depends on the partition of work roles. Al-Wagayan also exposed the differences that exist between the Kuwait bankruptcy laws and the laws so applied in the United Arab Emirates and Bahrain stating that current laws applicable with regard to bankruptcy and incapacity of settlement of debt in Kuwait and other countries are outdated and do not reflect the modern forms of work whereas articles of such laws have not been experimented with and therefore, its is hard to expect the verdict that may be rendered by virtue thereof. For that reason, it is necessary to review the current laws in light of the latest developments imposed by the current world crisis.

The managing partner of the office indicated in his presentation that “The obstacles preventing recovery are stagnation, defaulting, bankruptcy and the intense reliance on the government and the old existing obstacles. Moreover, the legal regulations in the States of Gulf Cooperation Council are not based on or designated for dealing with the contraction cases.”

He also discussed in his presentation the reaction of the government and the legislators, stating that “The effect of the crisis or the recovery is not the same in all the States of the GCC”. The Saudi Arabian Monetary Agency sought to guarantee a better level of transparency by putting pressure on the defaulting companies, to reveal the real levels of debts, he added. The Qatar Investment Authority resolved to purchase 10 to 20 per cent of the capital of banks listed in Doha Stock Exchange, while Dubai pumped 20 billion dollars in the government entities and the entities related to the government that is considered of strategic importance for development in this Emirate, he stated. As for Kuwait, the government interference was not on the same level, he pointed out.

The other partner spoke about his presentation where discussed about restructuring debts, and pointed out that it was necessary that the managers of any defaulting companies face the same issues with its creditors and deal with them to reach arbitration. He stated: “The other substitute is to sit and pretend that the problem does not exist.” He added: “There is a third matter which is making sure of the manner of restructuring debts. This provides many options and enables the parties to reach a solution, if any.” Other experts spoke about the faltering of the world financial crisis concerning the GCC States of the region.

They went on to state that the real estate retreat in Dubai has affected the economic growth and banks and mentioned that the crisis in Kuwait has affected the investment companies under the circumstances of not being sure of launching solutions or government initiatives, which aggravates the problem. They also pointed out that the last financial period, the performance of the entire region had declined.