Vol 13 (2016) - Issue 1

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A Critical View of the Current Bankruptcy Regime in Oman

1. Statutory framework for bankruptcy
Whether having a separate bankruptcy/insolvency law or not, every country has some rules designed to deal with the insolvency of traders. However, the types of bankruptcy procedures available differ from country to country. While some countries have limited insolvency proceedings, others have a variety of insolvency proceedings. For instance, in England there are five insolvency proceedings: administration, administrative receivership, CVA, scheme of arrangement and liquidation proceedings, whereas in the US there are two bankruptcy proceedings, Chapter 11 reorganisation and Chapter 7 liquidation. However, the features of each of these proceedings differ. For instance, whereas under the US Chapter 11 directors retain their position, they are displaced during administration procedures in England. Also, whereas the purpose of the receivership proceeding in England is to protect the interests of a floating charge holder by appointing a receiver, the purpose of both the administration regime and the US Chapter 11 are, generally speaking, to rehabilitate the business of the company in order to protect the interest of all creditors.
At present, Oman does not have a separate bankruptcy law and in dealing with the bankruptcy of traders both the Omani Commercial Code of 1990 and Omani Commercial Companies Law of 1974 incorporate certain articles. However, the Commercial Code of 1990 contains one chapter on the bankruptcy of traders and the Commercial Companies Law of 1974 governs companies’ liquidation procedures. Although the Omani Commercial Code has a detailed chapter on the bankruptcy of traders, as will be discussed below, a number of crucial issues are not regulated which renders it incomplete.