Legal Highlights

Debtor’s Liability for Treacherous Insolvency

If a debtor fails to repay his debt on the pretext of insolvency, the execution judge shall consider the establishment of insolvency after reviewing the debtor’s  disclosure of property and, if established, an announcement containing the reasons of application of insolvency shall be published in a daily newspaper where the debtor resides or is in business. (Article 77, Execution Law 1433H).


We must distinguish between two events of the debtor’s liability:

1.The First Event:  If the debtor claims insolvency but the execution judge determines that he is concealing his property, the execution judge shall, upon  judgment, imprison him for a period not exceeding five (5) years after taking into consideration the amount of the debt. The judgment is subject to review by the Court of Appeal under Article 78 of the Execution Law 1433H.


The Second Event:  Article 80 of the Execution Law further states that if the debtor claims insolvency and the execution judge finds out that the  insolvency claim is a treacherous one, or if the debtor fails to repay the debt as a result of negligence on his part, the judge shall document the incident and complete execution procedures by ordering detainment of the accused and referring the accusation file within no more than seven (7) days to the General Prosecutor to file a criminal complaint.