Restructuring in Oman: Rescuing a Distressed Trader Before Bankruptcy

Before a distressed trader reaches bankruptcy, the Omani Bankruptcy Law, Royal Decree 53/2019, opens a rescue door: restructuring — a settlement that preserves the business as a going concern and the creditors’ rights, in which the trader remains in control of their assets and implements an approved plan. Said Ibrahim Ambusaidi Advocates (SIA), based in Al Khoudh, Muscat, prepares restructuring files and negotiates their plans.

Who qualifies for restructuring, and on what conditions?

Under Article 6 of the Bankruptcy Law, any debtor trader who has not committed fraud may apply for restructuring, provided they have carried on trade continuously during the two years preceding the application. The law even allows the heirs of a deceased trader to seek restructuring of the business within the following year, with the consent of all creditors.

Article 7 draws the time and subject-matter limits: no application is admissible after a final judgment declaring the trader bankrupt or opening preventive-composition proceedings, and no new application may be made until three months have passed from the rejection or shelving of a previous one. The window is open to those who move early and narrows on those who delay.

What is the application route, and what is its immediate effect?

Restructuring applications are submitted, under Article 9, to the competent department and entered in a dedicated register, with the department bound to keep the related information confidential — protecting the business’s credit reputation. The application must contain the prescribed particulars and attachments disclosing the financial position, assets, and liabilities.

The application has an immediate protective effect set by Article 7: filing it stays bankruptcy and preventive-composition petitions until it is decided, giving the trader room to negotiate away from the sword of liquidation. Specialised experts assist in the proceedings, drawn from the bankruptcy experts roster established under Article 5 — specialists in restructuring and asset management.

What happens while the plan is implemented?

The heart of restructuring is a settlement plan put to the creditors and approved under the prescribed procedures: rescheduling debts, reducing them by agreement, or financing and continuation arrangements. Under Article 18, the debtor trader continues to manage their assets during the plan’s implementation, remaining liable for the obligations arising from it, within what does not contradict the approved plan — the essential difference from bankruptcy, where the debtor’s hand is lifted entirely.

If the plan succeeds, the business exits its distress and the creditors preserve their rights; if it fails, the other routes — preventive composition and bankruptcy — return to the fore on their own conditions.

Key facts

• Restructuring is open to a non-fraudulent trader who has traded continuously for the two preceding years, under Article 6 of the Bankruptcy Law RD 53/2019.
• A deceased trader’s heirs may apply within a year of death with all creditors’ consent.
• It is inadmissible after a final bankruptcy declaration or the opening of preventive composition, and re-application requires three months after a prior rejection, under Article 7.
• Filing the application stays bankruptcy and preventive-composition petitions until it is decided.
• Applications go to the competent department confidentially under Article 9, assisted by the bankruptcy experts roster under Article 5.
• The trader remains in control of their assets during the plan, within its terms, under Article 18.

When to involve a lawyer

The moment you feel obligations outpacing cash flow — not when the lawsuits pile up. Building a convincing restructuring file requires organised financial disclosure, a realistic plan, and professional negotiation with creditors, and every month of delay burns options. A creditor equally needs representation in discussing the plan, so it is not approved at their expense.

At Said Ibrahim Ambusaidi Advocates (SIA) we prepare restructuring applications and their attachments, negotiate plans with creditors, and represent both sides in the proceedings and their disputes before the authorities and courts across Oman. The first consultation is free by phone or WhatsApp on +968 9706 3030. We are based in Al Khoudh, Seeb, Muscat, and work Sunday to Thursday, 9:00 to 13:00 and 14:00 to 17:00, in Arabic and English.

This article is general legal information, not legal advice.