Jordan: The Draft of the Reorganization, Bankruptcy and Liquidation Law for the Year 2012 (The ‘Draft Law')

Analysis

In an attempt to offer some aid to merchants and businesses struggling financially in the midst of this financial crisis, a new law draft has been submitted for the competent authority's approval.

According to Article 3 of the Draft Law, these provisions are applicable to all merchants practicing commercial activities except for the following:

Companies licensed in accordance with the provisions of the Banking Law and the Currency Exchange Law.
Companies licensed in accordance with the Laws regulating the dealings with the foreign stock exchange.
Insurance companies licensed in accordance with the Draft Law regulating the Insurance activities or any Draft Law that may replace the same.

When this Draft Law comes into effect, it will deal with issues such as the following:

The reorganization of businesses in financial trouble.
Judicial settlement of debt incurred by merchants practicing commercial activities.
Bankruptcy of merchants conducting commercial activities.
Optional liquidation of merchants conducting commercial activities.
Compulsory liquidation of merchants conducting commercial activities.
Penalties applicable to the actions carried out in discordance with the provisions of this Draft Law.