The merit of Saudi Arabia’s new bankruptcy law, part of efforts to help the kingdom attract investors, should become clearer in about a year after courts handle initial cases, a World Bank representative and senior government official told Reuters. A lack of modern bankruptcy regulations had created difficulties for struggling companies seeking to restructure debt with creditors since the 2009 global financial crisis and the more recent dip in oil prices. Legislation introduced in 2018 is part of broader efforts to overhaul the economy of the world’s top oil exporter to entice foreign investment, create jobs for young Saudis and diversify into non-oil industries. “They have started on insolvency,” said Simeon Djankov, World Bank senior research director and founder of the Doing Business report, which on Thursday ranked Saudi Arabia’s business climate the most improved over the previous year. “The law has been passed, secondary legislation was already passed. Now we need to see whether the courts actually understand how to implement it.” Djankov said only three cases had been settled and around a dozen others are currently in the courts. Several dozen more, expected to be resolved over the next year, should provide enough evidence to evaluate the law’s success, he added.
