Restructurings under Oman’s new Bankruptcy Law

Oman’s Bankruptcy Law 53/2019 (the “Bankruptcy Law”) came into force and effect on 7 July 2020. It supersedes Book 5 of the Law of Commerce 55/90 (the “Law of Commerce”) as the primary source of Oman’s bankruptcy laws. The Bankruptcy Law is divided into the following sections: • Restructurings • Preventative Compositions • Bankruptcies Preventative compositions and bankruptcies were previously regulated by the Law of Commerce. The Bankruptcy Law upgrades these procedures. Both procedures involve filing petitions to the court.


Restructurings under the Bankruptcy Law are new. Their objective is to allow a trader to continue its business while in financial distress, and to emerge from that distress as a solvent and viable business through a consensual restructuring of its debts.

Unlike preventative compositions and bankruptcy proceedings, restructurings are initially conducted under the aegis of Oman’s Ministry of Commerce, Industry and Investment Promotion (the “MOCI”),not the court.

In common with preventative compositions, restructurings are designed to assist traders. Accordingly, they may only be initiated by traders.

Initiating a restructuring

Traders may apply to restructure their debts where a financial/administrative disorder arises in relation to their business. Subject to limited exceptions, for these purposes a “trader” means any person or entity that engages in commercial activities in its own name, that is qualified in the requisite manner, and that makes such commercial transactions an occupation.

A trader may only submit are structuring petition if it has not committed any act of fraud and has carried on its business continuously during the two years before the filing of the petition. Filing a restructuring petition will, until the final adjudication of the restructuring petition, have the effect of staying any bankruptcy petitioner petition for preventative composition. A restructuring petition may not however be submitted if there has been a final declaration of bankruptcy or a judgment or if a preventative composition petition has been approved.

The restructuring petition must be submitted to the Control and Inspection Department of Commercial Establishments of the MOCI (the “Department”) within six months from the date of the financial and administrative disorder, and must state:

  • the reasons for the financial and administrative disorder;
  • the date of the disorder;
  • the steps taken by the trader to overcome or remedy such disorder; and
  • the steps the trader deems necessary to overcome such disorder.

Various supporting documents must also be provided, including the names of the trader’s creditors and debtors, their addresses, the quantum of their claims/debts, and any security provided in relation thereto.

The function of the MOCI in restructurings

The Department will hold meetings with all concerned parties to mediate and seek to settle the issues identified in the restructuring petition. We would expect the “concerned parties” to comprise the trader and any creditor/debtor that would be affected by the proposed restructuring.

The Department may also appoint are structuring committee comprising of members of the roll of experts (the "restructuring committee”) to review the petition. The role of the restructuring committee is to prepare a report containing:  

  • the reasons for the disorder;
  • a restructuring feasibility study; and
  • a restructuring plan.

This report must be submitted to the Department or the court, as the case may be, within three months from the date of the restructuring committee’s appointment. The restructuring plan must be capable of implementation within five years.

The settlement agreement and restructuring plan

Where a settlement is agreed, the trader and the relevant creditors will execute the settlement agreement (and restructuring plan, where applicable) which will then be submitted to the court for approval, and such court-approved plan will be binding on all the signatories to the settlement agreement.

If the parties approve a restructuring plan, the court may appoint a person from the roll of experts to assist the trader to implement the restructuring plan. Such person will be required to report every three months on the trader’s compliance with restructuring plan, and will submit such report to the Department and the signatories to the restructuring plan.

During the implementation of the restructuring plan, the trader will continue to manage its assets, and will remain liable in respect of obligations that:

  • are not included in the restructuring plan;
  • are subsequent to the date the restructuring plan is approved; and/or
  • are contrary to the terms of the restructuring plan.

If the parties are unable to reach a settlement, the restructuring petition will be considered rejected. The trader may appeal a decision to reject the restructuring petition, but any such appeal must be made within 15 days of notification of rejection of the restructuring petition. The court will determine such appeal within seven days, and its decision will be final.


Restructurings offer a framework through which a trader can seek a MOCI-mediated consensus with one or more of its creditors. This formal process may yield results that elude private one-to-one negotiations with individual creditors. The trader will also continue to manage its assets.

Unlike preventative compositions, there is no minimum threshold of creditor approval for a settlement agreement and restructuring plan. This flexibility can be a double-edged sword: unlike preventative compositions, restructurings will only bind those creditors that sign the settlement agreement; and restructurings will generally only stay actions by creditors that are signatories to the settlement agreement.


Published in the MENA Business Law Review (September 2020)