Saudi bankruptcy filings reached 141 cases in the first quarter of 2026, against 74 in the same quarter a year before. Retail and construction made up close to two thirds of them. The monthly listings have kept coming through the summer, and trading and contracting firms remain the largest group entering preventive settlement.
Read from the outside, that is a story about weak companies. Read from where most of our clients sit, it is a story about counterparties. For every contractor that files, there is a project owner holding advance payments, a subcontractor carrying months of unbilled work, and a line of suppliers who extended credit against a name rather than a balance sheet.
Almost all of the commentary on the Bankruptcy Law is written for the debtor: which procedure to choose, what breathing room it buys, how to build a proposal. That is the smaller population by a wide margin. The larger one is everybody else on the contract, and the law has a good deal to say to them too. Most of it is not what they expect.
The clause you were relying on is void
Start with the instinct. A counterparty goes into a bankruptcy procedure, you reach for the contract, and you find the clause that lets you terminate on insolvency or accelerate what you are owed. Nearly every construction and supply contract in the market has one.
Under a Protective Settlement, it does nothing. Article 22 of the Bankruptcy Law provides that registering an application, or the commencement of the procedure, does not make undue debts fall due, and states plainly that any condition to the contrary is null and void. Article 23 goes further: commencement has no effect on any contract to which the debtor is a party, and again, a condition to the contrary is void. Your acceleration trigger and your insolvency termination right were written out of the contract by statute.
What replaces them is an obligation. Under Article 24, contracts stay valid and the counterparty is required to keep performing, so long as the debtor keeps meeting the obligations that arise after commencement. Whatever the debtor failed to pay you before commencement goes into the claims list. Whatever falls due after it has to be paid on time.
So the position on the morning of the filing is roughly the opposite of what most contract managers assume. You cannot walk away. You must keep supplying, keep building, keep staffing the site. Your pre-filing exposure has turned into a claim you will have to prove, and your only clean exit is the one in Article 24(2): if the debtor stops meeting its post-commencement obligations, you apply to the court to terminate and be discharged. Note where that sits. It is a court application, not a letter from your legal department.
Fourteen days, from an announcement nobody sends you
Here is the part that costs creditors real money, and it is procedural rather than clever.
The debtor's proposal contains a list of debts. The debtor prepares that list. If your claim is on it at the right number, you are in the process. If your claim has been left off, understated, or recorded against the wrong entity in your group, Article 33(2) of the Implementing Regulations gives you 14 days from the date the debtor announces the commencement of the procedure to apply to the court to be included.
Fourteen days is not long. The harder problem is when the clock starts. It runs from the debtor's announcement, published under Article 16(2) within 7 days of commencement, and an announcement is not a letter addressed to you. If nobody in your organisation is watching the Bankruptcy Register, the first you hear of it may well be a colleague mentioning that a supplier has gone quiet.
The rest of the calendar is no more forgiving. Under Article 16(1) the court fixes the creditors' vote within 40 days of commencement, extendable once by a further 40. From the filing to the vote that binds you, this can be over in under two months.
Ask your own organisation a plain question. If your second largest subcontractor filed on Sunday, who in the business would know by Thursday, and could they produce the contract, the payment history, the retention position, the guarantees held, and a defensible figure for what is owed? If the honest answer is that it would take a fortnight to assemble, you have already lost the window.
Not voting is a decision
Creditors treat the vote as a formality when the outcome looks predetermined. The arithmetic in the law says otherwise.
Under Article 31(2), the proposal is approved if each class of creditors approves it, and a class approves when creditors holding two thirds of the value of debts owed to those who voted support it. The denominator is the creditors who turn up, not the creditors who exist.
That has a consequence worth sitting with. Abstaining does not leave the outcome unchanged. It shrinks the pool the two thirds is measured against and makes approval easier for whoever did vote. A creditor who stays out of the process because the debt is small, or because the file has been passed to someone who is on leave, has not been neutral. They have helped pass the proposal.
The same provision has a second limb that rewards attention: the approving class must include creditors holding more than half of the debts owed to parties who are not related parties. Where a proposal leans on related-party debt to get itself over the line, that is the sentence to read closely.
What the moratorium actually blocks
The moratorium is the most misunderstood part of the framework, in both directions.
In a Protective Settlement it is not automatic. Under Article 17 the debtor has to ask for it, and the request must come with a report from a licensed officeholder saying the proposal will probably be approved and can actually be implemented. Article 18 then caps what the court can give: up to 90 days initially, extendable in 30 day increments, and no more than 180 days in total. This differs from the Financial Restructuring Procedure, where Article 46 attaches a 180 day moratorium to the filing itself, extendable by up to another 180. Which procedure your counterparty chose changes your position materially, and the two get discussed as though they were the same thing.
When a moratorium is in force, Article 20 is broader than most creditors assume. It stops proceedings and enforcement against the debtor and its assets. It stops enforcement over assets given as security, unless the court consents. And it stops action against the personal guarantor of the debt, again unless the court consents.
That last one deserves emphasis, because the parent company guarantee or personal guarantee is exactly the instrument credit teams rely on when a counterparty starts to wobble. During a moratorium, it is not simply available to you. Article 21 sets out the narrow grounds on which the court will let a secured creditor enforce anyway, and they turn on whether enforcement damages the debtor's ability to continue trading and on the relative harm to the secured creditor. That is an argument to be prepared, with evidence, not a right to be exercised.
The work happens before the filing
None of the above is where a creditor recovers value. By the time a procedure commences, the outcome is largely a function of what you can prove and how fast you can prove it. Both were determined months earlier.
The signals arrive well ahead of the listing, and they are operational rather than financial. Payment behaviour changes shape first: part payments, longer approval cycles, disputes raised against invoices that were never previously questioned. Then the contractor's own supply chain starts moving, with subcontractor turnover on site, plant going off hire, and small suppliers refusing to deliver without payment up front. Progress slows in ways the reported percentage complete does not capture. In our experience these are visible to the people on site for one to two quarters before anything appears in a register, and they rarely reach the credit committee, because nobody has been asked to pass them along.
Four things are worth having in place before you need them.
Someone watches the register. Named, with a fallback, covering your material counterparties and their affiliates. The 14 day inclusion window starts from an announcement, and a window you did not notice is a window you did not have.
Advance payments are traced, not just recorded. Where an advance or a mobilisation payment has gone matters more than the ledger entry saying it was made. If the money left the project it was advanced for, that is a question best asked while the recipient is still trading and the records are still accessible.
The claim file is standing, not assembled on demand. Contract, variations, approved and unapproved valuations, retention, guarantees with their expiry dates, and a reconciled figure that a colleague could defend without ringing the person who built it. This is the same discipline we described when the Enforcement Law reclassified promissory notes: the record either exists when the clock starts, or it does not.
Guarantees are checked for the scenario, not for the file. Expiry dates, the identity of the guarantor, and whether the instrument survives contact with Article 20. On demand security held at a bank sits differently from a guarantee given by a related company inside the same distressed group.
The point
Construction and engineering made up around 47% of the SCCA's 2025 caseload, the largest share of any sector, on 119 arbitrations worth roughly USD 1.09 billion. Filings are running well above last year, and the pressure described by restructuring advisers, fixed price contracts absorbing rising labour, materials and logistics costs, has not gone away.
The exposure is not evenly distributed. It sits with the companies that treat a counterparty's solvency as a legal question to be dealt with when it arrives, rather than an operational one to be monitored while there is still something to monitor. The Bankruptcy Law is not hostile to creditors. It is simply built for creditors who are paying attention, on timetables measured in days.
Alpha Advisory works with employers, contractors and suppliers on counterparty distress: monitoring frameworks that surface the early signals, tracing advance payments and related party transfers while the trail is warm, building claim files that survive a compressed timetable, and representing creditors through the vote and the court applications that follow. If a counterparty filed tomorrow, the useful question is not what you would argue. It is what you could evidence by Thursday. Speak with a Specialist.