Bankruptcy Application – How Do I Apply for Bankruptcy

The Jordanian legislator has regulated the procedures for declaring bankruptcy in the Bankruptcy Law. After the declaration, bankruptcy proceedings go through multiple stages outlined by the legislator in the law. These stages include:

1. Preliminary Stage: This stage involves listing the debtor’s obligations, creditors, and gathering all necessary information.
2. Reorganization Stage: During this stage, the debtor and creditors reach an agreement on a reorganization plan unless a liquidation request is submitted.
3. Liquidation Stage: This stage involves liquidating the debtor’s assets when reorganization is not feasible.

To begin the process, the bankruptcy application is submitted to the Court of First Instance where the company or individual’s main office is located. The application can be filed by the debtor, any of its creditors, or the company’s general manager if the debtor is a company. Priority is given to the debtor’s application in cases of actual bankruptcy. For imminent bankruptcy, only the debtor or its authorized representative can file the application.

The application must include:

• A report detailing the reasons for bankruptcy and an analysis of the future economic activity.
• A certificate from the debtor’s registration authority showing its registration date and any changes.
• Financial and accounting records including budgets, financial statements, or commercial books for the three years preceding the application.
• A list of the debtor’s movable and immovable assets, their values, locations, and related information.
• A list of the debtor’s creditors including their names, addresses, debt amounts, origins, and due dates.
• A list of the debtor’s debtors including their names, addresses, amounts owed, origins, and due dates.
• Details of any legal actions involving the debtor.
• Any other relevant information.

If the Court finds the application compliant with the Bankruptcy Law, it issues a decision declaring the debtor bankrupt within 30 days of the application submission. If the information in the application is found to be non-compliant, the debtor is given 15 days to rectify it, and failure to do so results in the application being rejected. If the application is submitted by a creditor for the declaration of bankruptcy against the debtor, the creditor must provide evidence of the debt owed by the debtor, specifying the amount and due date without any conditions attached.

The following constitutes evidence of actual insolvency when presented by the general companies’ controller or any creditor:

• If the summoning creditor or any of the debtor’s creditors initiates enforcement proceedings against the debtor under the provisions of the execution law and fails to collect their rights from the debtor.
• Imposing executive attachment on the entirety of the debtor’s funds.
• If the debtor has either escaped or fraudulently sold their funds.
• If the debtor is a natural person and has become unknown at their place of residence or has closed their main business center if they are considered a legal person.
• Issuance of a court decision recognizing the primary foreign insolvency proceedings.

If the court finds that the insolvency declaration request submitted by the creditors or the companies’ controller complies with the conditions stipulated in the insolvency law, the court shall serve the debtor holding the accompanying documents of the request within five days from the date of submission.

The debtor has the right to object to the request, refute the claims, prove their ability to pay, and that their debt is not occupied to the summoning creditor within ten days from the day following the date of service, provided they attach the necessary data to prove their payments with their objection. If the debtor does not object and the court deems that the conditions stipulated in the law are met, the court issues a decision to declare insolvency within fifteen days from the end of the debtor’s objection period.

In case of an objection from the debtor to the court, the court considers the objection after setting a date not exceeding fifteen days, and based on that, the court issues its decision on the request on an urgent basis within a period not exceeding ten days from the date of the last session and within fifteen days from the date of the debtor’s objection submission.