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“Look- Back Period”
In the event of an adjudication of bankruptcy the Court will fix a provisional date on which payments by the company
ceased; that is the date upon which it is deemed to have become insolvent (“Insolvency Date”), and in the absence of
such determination the date of entering of the judgment adjudicating the company bankrupt will be the Insolvency Date.
Under Article 584 of the Commercial Code the following dispositions are invalid vis-à-vis the bankrupt’s creditors, if
they were carried out by it between the Insolvency Date and the date of the adjudication order (where the latter is not
also the Insolvency Date): All donations, except minor customary gifts; (ii) Payment of debts prior to maturity,
irrespective of the method of payment used. Arranging provisions for a negotiable instrument not yet matured shall be
deemed as payment prior to maturity); (iii) Payment of debts which are due other than as was agreed upon. Payment by
way of negotiable instrument or bank transfers shall be deemed a payment in cash; and (iv) Any mortgage or other
contractual security.
All other dispositions effected by the bankrupt during the aforementioned period may be declared ineffective vis-à-vis its
creditors if the disposal is damaging to a creditor and the party to whom the disposal is made was aware at the time that
the bankrupt had ceased payment.
Management of Bankruptcy
The President of the Court of First Instance Division (the ultimate judicial authority in bankruptcy matters) will appoint
one or more managers to administer the bankruptcy.
The bankruptcy manager must administer and safeguard the assets of the bankrupt and must act for the bankrupt in all
activities necessary for the administration of the bankruptcy.
The manager of the bankruptcy will procure the publication of a summary of the Court judgment in Kuwait Al Youm
(the Official Gazette of Kuwait), as legal notice to all persons, within two weeks from the date of adjudication of
bankruptcy.
The bankruptcy manager by such notice will invite the bankrupt’s creditors whose names are entered in the bankrupt’s
balance sheet to present their claims along with all supporting documents. These creditors must present the documents of
their debts together with a statement of the debts, within ten days from the date of publication in Kuwait Al Youm (this
time limit will be extended to one month in regard to creditors who reside outside Kuwait). The President of the Court of
First Instance Division will prepare a final list of the undisputed debts.
Creditors who fail to present their applications within the prescribed time may not participate in current distributions
however they may file an objection with the President until the distribution of monies is finished. Such creditors may
then participate in any new distribution in the amounts estimated provisionally by the Court and their share will be
reserved for them until their objection is settled.
Binding contracts to which the company is a party will not be rescinded by the adjudication of bankruptcy, unless such
contracts are based on personal considerations. Where the bankruptcy manager fails to perform a contract, the other party
may apply for the contract to be rescinded and will participate in the bankruptcy in respect of the compensation due to it
resulting from the rescission.
Any assets to which a party proves title may be recovered from the company; if the bankruptcy manager refuses to
deliver the same the dispute will be referred to the Court.
Egypt
Insolvency Proceedings
The Egyptian Trade Law 17 of 1999, Part V, governs bankruptcy proceedings. The bankruptcy of an Egyptian company
may be declared by the company itself, one of its creditors or the public prosecutor. The Egyptian courts, while
examining a case, are also empowered to “automatically” declare a bankruptcy. The court declaring the bankruptcy
appoints a bankruptcy trustee that is empowered to manage and preserve the funds of the bankrupt entity and to represent
the bankrupt entity in all suits related to the management of its funds. The main functions performed by the bankruptcy
trustee are to verify debts, liquidate the bankruptcy property and distribute its proceeds among the creditors
pro rata
to
their respective debts. The declaration of bankruptcy results in prohibitions on the bankrupt entity from managing and
disposing of its property, and such prohibitions extend to all funds owned or to be owned by the bankrupt entity on or
after the date of the bankruptcy declaration.
