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Pursuant to Article 563 of the Egyptian Trade Law, the period up to two years before the bankruptcy declaration date
may be declared as a suspect period, during which creditors may claim the non-opposability of fraudulent transactions as
well as prepayments made by the debtor during such period. Upon the issuance of the bankruptcy ruling, creditors are
prevented from taking any individual legal actions, and existing proceedings initiated by creditors prior to the issuance of
the bankruptcy ruling are suspended. Therefore, ordinary creditors are required to join the creditor group in order to
recover their debts. Secured creditors and parties entitled to special lien rights, as well as those procuring liens over a
debtor’s property, are guaranteed to receive the benefit of the security, and have the right to file individual actions or
pursue their rights individually through the bankruptcy trustee.
All creditors should declare their debts and related privileges to the bankruptcy trustee during the ten days following the
publication in the newspaper of the declaration of bankruptcy or after the invitation to declare debts published in the
same newspaper by the bankruptcy trustee. After verifying the debts and related privileges, the bankruptcy trustee
prepares an inventory of all the debts and submits it to the judge for ratification.
With respect to a pledge of shares, the rights of creditors benefiting from the pledge is preserved, subject to the rights of
the general privileged debts, including legal fees, fiscal dues, preservation costs and salaries. If the sale price of the
shares underlying the pledge is not sufficient to cover the debt or exceeds
the amount of the debt, the creditor holding the
pledge shall join the other creditors as an ordinary creditor and be subjected to the proportional distribution to the
ordinary creditors of their debts out of the available funds.
Guarantees
Pursuant to the provisions of Chapter V of the Egyptian Civil Code (Law 131 of 1948), the validity of the
Note
Guarantee is subject to the validity of the Issuer’s obligations under the Notes, the
Note
Guarantee may not create a
greater obligation on behalf of the Guarantor than the obligations of the Issuer under the Notes, and the Guarantor may
generally avail itself of all defences that are available to the Issuer with respect to payment of the amounts subject to the
Note
Guarantee. In addition, Egyptian applicable laws, including laws with respect to fraudulent conveyance or voidable
preferences, necessary corporate power and the issuance of proper corporate resolutions, could render the
Note
Guarantee partially or entirely voidable or otherwise ineffective.
In particular, pursuant to Article 50 of the Egyptian
Trade Law no. 17 of 1999, the amount of interest payable with respect to the
Note
Guarantee could be limited to a
contractual maximum rate declared by the Central Bank of Egypt pursuant to Article 227 of the Civil Code (Law 131 if
1948) limited to a maximum of 7%. Furthermore, the
Note
Guarantee must be in the best interests of the Guarantor
demonstrable by a true commercial interest. In the case of the
Note
Guarantee, being a guarantee issued to guarantee a
parent company’s obligations, the ability of the Guarantor to share in the proceeds from the issuance of the Notes would
satisfy such requirement. Failure to demonstrate a true commercial interest could render the
Note
Guarantee voidable.
