• Chapter Fifteen Chapter Fifteen Administration of Banking Firms By The Agency and Their Forced Liquidation

    • Article 92

      A — Any banking firm whose financial operations are in disorder and who suspends payments of its debts, except for penal fines and taxes of any kind, shall be considered to be in a state of insolvency.
      B — Any banking firm that is in a state of insolvency shall cease to accept deposits.
      C — Any director, manager, official or employee who receives or approves the acceptance of deposits although he is aware or is supposed to be aware by reason of the performance of the duties of his office of the insolvency of the banking firm, shall be punished by a term of imprisonment not exceeding two years, and/or a fine of not more than 5,000 (five thousand) dinars.

    • Article 93

      The Agency may, with the prior approval of the Minister of Finance, assume the administration of any banking firm in the following cases:

      A — If it becomes insolvent.
      B — If its liquidity or insolvency are in jeopardy.
      C — If its continued activity is detrimental to the rights of depositors.
      D — If it commits serious contraventions of the provisions of this Law.

      When assuming the administration of any banking firm, the Agency shall publish a notice to this effect in the Official Gazette, post such a notice in every place of business of such firm, and in the local newspapers appearing on the day the Agency assumes administration.

    • Article 94

      The banking firm may, within the ten days following the Agency's assuming administration, ask the Minister of Finance to issue an order terminating the Agency's administration. In case the Minister denies this request, the banking firm may have recourse to the Court within ten days of the date of issuance of the Minister's decision denying the request, and the Court shall examine the case expeditiously.

    • Article 95

      A — When the Agency assumes the administration of any banking firm, it shall alone have all powers in regard to the Management and control of such banking term including, without limitation, the power to continue the operations by way of exception from the provisions of Article (92), or to suspend such operations, the power to suspend or limit the discharge of the financial obligations of the banking firm, the power to sign any documents on behalf of the banking firm and the power to file lawsuits in its name, defend it, or take part in any court proceedings to which the banking firm is a party.
      B — The Agency shall, as soon as possible after assuming the administration of any banking firm, make an inventory of the assets and funds of the banking firm and send a copy of the inventory report to the Minister of Finance. Another copy of the inventory report shall be kept at the Head Office of the banking firm where interested parties shall have access thereto.

    • Article 96

      The Agency must collect all debts owing to the banking firm whose administration it has assumed, which fall due during the period of such administration. It shall also collect any claims that the banking firm may have on others and take such legal or judicial action as is necessary for the collection and safeguard of such debts and claims. All fees and expenses borne by the Agency in this respect shall be charged to the account of the administered banking firm.

    • Article 97

      A — With the exception of restraints and lines laid on the assets and funds of the banking firm at least six months before its administration was assumed by the Agency, all restraints and other lines shall be considered null end void, and no restraints may be made nor can any lines be established on the assets and funds of the banking firm throughout the period of administration.
      B — Any transfer of the assets and funds of the banking firm made after the insolvency of such firm and the assumption of its administration by the Agency, shall be considered null and void when it is made with the intent to grant a preference.

    • Article 98

      No execution orders may be issued in respect of the assets or funds of any banking firm administered by the Agency, except for execution orders issued on the basis of a Court ruling issued before the date on which the Agency assumed the administration of such firm.

    • Article 99

      After assuming the administration of a banking firm, the Agency must, within a maximum period of six months from the date on which it assumed administration apply to the Minister of Finance for his approval of the forced liquidation of the banking firm in accordance with the provisions of paragraph (a) of Article (100) or of the return of the administration to the banking firm.

    • Article 100

      A — The forced liquidation of a banking firm shall be effected by virtue of a Court Ruling issued at the request of the Agency who must, immediately after filing its request at the Court, serve notice on the Directors, Owners, Depositors and other creditors of the banking firm, as well as on any party involved in the request. These persons shall have the right, within thirty days of the date of such notice, to file their objections with the Court, and the Court shall issue a ruling in this respect within thirty days following the expiration of the period prescribed for the submission of objections.
      B — The Court shall either order forced liquidation and, in this case, appoint the liquidator recommended by the Agency and fix his fees, or deny the request for liquidation and order termination of administration by the Agency.

    • Article 101

      A — When proceeding with the forced liquidation, the liquidator shall have the right to exercise any of the powers of the banking firm under liquidation. However, he must obtain the approval of the Court in order to be able to take any of the following measures :
      1 — Sell any asset or property of the banking firm when the value of such asset or property is in excess of 100,000 (one hundred thousand) dinars.
      2 — Hypothecate any of the assets or funds of the banking firm as a security in favour of any creditor of such banking firm.
      3 — Make any settlement or waiver of rights when the amount involved exceeds 50,000 (fifty thousand) dinars.
      B — The liquidator may, after the issuance of the Court ruling ordering forced liquidation, terminate any employment agreement, or any lease agreements or service agreements signed by the banking firm under liquidation within three months immediately proceeding the date on which the Agency actually assumed its administration.
      C — The liquidator must, as soon as possible after the issuance of the Court ruling ordering forced liquidation, take such measures as are necessary to terminate the activities of the banking firm relating to the custody of safe deposits, to return to the owners all assets and funds held in safe deposit by the banking firm, and to close safe deposit accounts.
      D — The liquidator shall, as soon as possible after the court ruling ordering forced liquidation is issued, send by registered mail to all depositors and other creditors, all safe deposit box holders as well as to owners of real property or other assets leased to the banking firm, at their respective addresses appearing in the books of the banking firm, a statement on the nature and amount of their rights as recorded in such books. This statement shall specify that any objection to it must be sent to the Court within a time limit which shall not be less than sixty days. The statement shall also include an invitation to the holders of safe deposit boxes and to owners of funds deposited as security to recover their property.
      E — If upon the lapse of sixty days the holders of safe deposit boxes have failed to withdraw their property, the boxes shall be opened in the manner to be determined by the liquidator. As regards property held by the banking firm under liquidation that is not claimed by the owners, as well as real property and other assets occupied by the banking firm as a tenant, and the lists of their contents, these shall be kept by the liquidator for a period of one year unless the owners claim their property before the end of this period.
      F — The liquidator may take such other action as he may deem necessary for the liquidation operations.

    • Article 102

      Within the six months immediately following the expiration of the period allowed for objections as set in the notice of forced liquidation referred to in Article (101) (d) or within such longer period as the Court may set, the liquidator shall:

      A — Reject any claim if he doubts its validity.
      B — Determine the amount which may be due to each depositor or each creditor, as well as the order of precedence of his claim under the provisions of this Law.
      C — Notify each person whose claim could not be accepted in full.

    • Article 103

      The liquidator shall prepare a programme covering the liquidation formalities and operations which he proposes to carry out, and shall submit this programme to the Court that issued the order of liquidation. The liquidator shall, once a week for three consecutive weeks, publish in a newspaper in circulation in the State of Bahrain a notice giving his proposed liquidation programme for perusal. The notice shall also give the date on which the programme is to be submitted to the Court. This date shall not be earlier than thirty days after the date of the third publication of the notice.

    • Article 104

      Within the twenty days immediately following the submission of the programme referred to in the preceding Article, any depositor or any other creditor, as well as any shareholder or other owner of the banking firm under liquidation, and every interested party, may submit to the Court his objection to the programme. The Court shall examine such objections with the interested parties of its choice. If the Court approves the objection, it will order the appropriate modification to be made in the programme, and the liquidator may, after submitting the programme to the Court and from time to time, make partial distributions to those whose claims were undisputed or were admitted by the Court, provided a reserve is set aside for the payment of disputed obligations owing by the banking firm. The liquidator shall, as soon as possible and after all objections shall have been decided upon, make the final distributions.

    • Article 105

      In the case of forced liquidation of a banking firm, the following payments shall have preference in the order in which they are set out below and shall be made before any other disbursement.

      (1) Necessary and reasonable expenses made by the liquidator to implement the provisions of this Law.
      (2) Any amounts, other than Government deposits, that may be due and payable to the Government or its organizations or agencies, or to public authorities.
      (3) Wages and salaries of the officials and employees of the banking firm for the three months immediately proceeding the date on which the Agency assumed actual administration of the banking firm and within a maximum amount of 500 dinars for each individual.
      (4) Any fees or charges accrued to the Agency.
      (5) Deposits within a maximum limit which shall not exceed 1,000 dinars for each depositor.
      (6) Other deposits.
      B — If the amounts set aside for the payment of any class of the obligations mentioned in paragraph (a) are not sufficient for its full satisfaction, such obligations shall be reduced in equal proportions.

    • Article 106

      All remaining assets after satisfaction of all obligations of the banking firm wound up by forced liquidation, shall be distributed to its shareholders or other owners according to their respective shares in its capital.

    • Article 107

      After completion of the distribution of all assets of the banking firm wound up by forced liquidation, the liquidator must submit an account to the Court and to the Agency, and the Agency shall not be considered responsible for any obligations relating to the forced liquidation.