About Restructuring & Insolvency Law in Hashemite Kingdom of Jordan
Restructuring and insolvency law in the Hashemite Kingdom of Jordan is designed to protect both creditors and debtors when a business faces financial distress. The legal framework enables businesses in financial difficulty to either restructure their debts and operations or, if recovery is not possible, undergo a formal insolvency process. Historically, Jordanian insolvency law was found in various statutes, but significant reforms, particularly the Jordanian Insolvency Law No. 21 of 2018, aimed to modernize the approach toward bankruptcy, encourage business preservation, and align with international best practices. The law sets out procedures for restructuring, liquidation, and the protection of creditors' rights, while also offering businesses an opportunity for recovery and continued operation when feasible.
Why You May Need a Lawyer
Navigating restructuring and insolvency can be complex, involving numerous legal obligations and financial repercussions for businesses and individuals. You may need a lawyer if you are:
- Facing mounting debts and unable to meet financial obligations
- Considering restructuring your business to avoid insolvency
- Worried about creditors pursuing legal action to recover debts
- Seeking to protect your personal or business assets during financial distress
- A creditor seeking to recover funds from an insolvent company
- Unsure about filing requirements, court procedures, or negotiation with other parties
- Wishing to explore rescue options such as settlement agreements with creditors
- Dealing with cross-border insolvency matters involving Jordanian law
- Concerned about personal liability as a company director or shareholder
- Appointed as an insolvency practitioner, trustee, or liquidator in Jordan
A lawyer knowledgeable in Jordanian restructuring and insolvency law can provide crucial guidance, maximize the chances of successful negotiations, and help ensure compliance with all legal requirements.
Local Laws Overview
Jordan's restructuring and insolvency regime is primarily governed by the Insolvency Law No. 21 of 2018. This law regulates corporate and individual insolvency proceedings, including the following key aspects:
- Restructuring Proceedings: The law allows debtors facing financial distress to apply for restructuring with the aim to restore solvency and continue operations with court supervision.
- Insolvency Declaration: If restructuring is not viable, the court may declare insolvency leading to liquidation procedures, asset disposition, and creditor payments.
- Creditor Rights: Creditors are notified of proceedings and may participate through creditor committees and voting on restructuring plans or distributions from liquidation.
- Stay on Legal Actions: Once proceedings commence, there is an automatic suspension of lawsuits or enforcement actions against the debtor's assets.
- Asset Management: A court-appointed insolvency trustee manages the debtor’s assets, business operations, and distribution to creditors.
- Protection for Good Faith Efforts: The law encourages good faith restructuring attempts and provides protection for directors and management from certain liabilities when acting transparently and in compliance.
- Cross-Border Insolvency: The law contemplates cooperation with foreign courts and insolvency proceedings, which is essential for businesses with international dealings.
Filing requirements, notice periods, and court approvals are strictly regulated, making compliance essential for both debtors and creditors.
Frequently Asked Questions
What is the difference between restructuring and insolvency in Jordan?
Restructuring involves reorganizing a business’s financial obligations and operations to allow it to continue operating, while insolvency typically results in liquidation, the sale of assets, and payment of debts before the business is dissolved.
Who can initiate restructuring or insolvency proceedings?
Both the debtor and creditors may file for insolvency. Only the debtor can request a restructuring procedure before the court if the company is in financial difficulty but still viable.
What happens to ongoing lawsuits or enforcement actions once proceedings start?
There is an automatic stay, meaning most legal actions and enforcement proceedings against the debtor are suspended as soon as restructuring or insolvency proceedings are initiated.
Are directors or owners personally liable for company debts?
Generally, company directors and shareholders are not personally liable, unless there is evidence of fraud, gross mismanagement, or failure to comply with legal requirements.
What is the role of an insolvency trustee?
The insolvency trustee, appointed by the court, oversees asset management, business operations (if running), creditor claims, asset sale, and fair distribution of proceeds.
Can a business recover after entering insolvency proceedings?
If the court and creditors approve a viable restructuring plan, the business may recover and continue operations. If not, the assets are liquidated and the company is usually dissolved.
What should creditors do if their debtor is in restructuring or insolvency?
Creditors should promptly file their claims, participate in creditor meetings, review restructuring proposals, and ensure their rights are defended during the process.
How long do restructuring or insolvency proceedings last?
The duration varies depending on the complexity of the case, the number of creditors, and whether restructuring is successful. Proceedings commonly last several months to more than a year.
What information and documents are needed to initiate proceedings?
Key documents include financial statements, debt lists, creditor contact information, company registration papers, and any relevant contracts or legal agreements.
Is insolvency information public in Jordan?
Once a restructuring or insolvency case is filed, it becomes part of the public record. Certain details, like court decisions and notices to creditors, are publicly disclosed to ensure transparency.
Additional Resources
If you need further information or support, consider reaching out to these resources and organizations:
- Jordanian Ministry of Industry, Trade and Supply - Handles business registration, insolvency case records, and regulatory oversight
- Jordanian Courts - The Courts of First Instance are responsible for overseeing insolvency and restructuring proceedings
- Jordanian Bar Association - Can refer you to qualified lawyers experienced in restructuring and insolvency matters
- Licensed Insolvency Trustees - Professionals authorized to act in insolvency cases in Jordan
- Jordan Chamber of Commerce - Offers guidance for businesses experiencing distress and can direct members to legal support
- Financial and Legal Education Programs - Offered by various universities and legal institutions in Jordan to educate about insolvency processes
Next Steps
If you are facing financial difficulties or are involved in a restructuring or insolvency situation in Jordan, consider the following steps:
- Collect and organize all relevant financial documents, including debts, assets, contracts, and correspondence
- Seek initial legal consultation to understand your options, legal rights, and the best course of action
- Contact a lawyer specializing in restructuring and insolvency in Jordan for tailored advice and representation
- Stay informed about regulatory requirements and deadlines to avoid forfeiting rights or assets
- Engage with creditors professionally, as open communication often leads to more favorable outcomes during negotiation or restructuring
- Follow all court instructions and comply with required disclosures to ensure your case proceeds smoothly
Taking prompt, informed action and seeking professional support can help you navigate the complexities of restructuring and insolvency law in the Hashemite Kingdom of Jordan.
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Disclaimer:
The information provided on this page is for general informational purposes only and does not constitute legal advice. While we strive to ensure the accuracy and relevance of the content, legal information may change over time, and interpretations of the law can vary. You should always consult with a qualified legal professional for advice specific to your situation.
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