What are the legal requirements for filing a bankruptcy case in Egypt?

To file a bankruptcy case in Egypt, several legal conditions and controls must be met, as specified by Commercial Law No. 17 of 1999 and Law No. 11 of 2018 Regulating Restructuring, Protective Reconciliation, and Bankruptcy. These conditions include the following:

Basic Legal Conditions for Filing a Bankruptcy Case in Egypt

• Trader Status:

Bankruptcy cases are only admissible against a trader registered in the Commercial Registry, whether a natural person or a legal entity (company)[1][2][3].

• Suspension of Payment of Commercial Debts:

The trader must have actually stopped paying his outstanding commercial debts, and not merely temporarily defaulted or refrained from paying non-commercial debts (such as taxes, fines, or social insurance, as these are not valid grounds for a bankruptcy case)[4][5].

• Who has the right to file a lawsuit:

o The trader himself if he stops paying (the application must be submitted within 15 days from the date of the cessation).

o A creditor with a due and undisputed commercial debt.

o The Public Prosecution in some cases.

o A merchant may be declared bankrupt after his death or retirement from business if he is in a state of default, provided that the application is submitted within one year of his death or retirement from business.

• The debt subject to the lawsuit:

o The debt must be commercial, due, and free from dispute.

o A bankruptcy lawsuit may not be filed based on a debt fully secured by a registered collateral or movable asset, unless the value of the debt exceeds the value of the collateral.

• Documents and information to be submitted with the application:

o The main commercial books.

o A copy of the latest balance sheet and profit and loss account.

o A statement of total personal expenses for the previous two years or the period of business.

o A detailed statement of real estate and movable assets and their approximate value.

o A statement of the names of creditors and debtors, the value of the debts, and the securities guaranteeing them.

o A statement of any protests (e.g., bounced checks) during the previous two years.

o A certificate indicating that no protective settlement or restructuring judgment has been issued.[6][2][3]

• Depositing a security deposit for publication expenses:

An amount (usually 10,000 Egyptian pounds) must be deposited in the court treasury as a security deposit for publication expenses.[6][5]

• Additional procedures:

o Documents must be dated and signed by the merchant. If some documents cannot be submitted, the reasons must be explained.[6][2].

o If the application is submitted by a creditor, it must state the circumstances that prove the debtor's failure to pay and request the necessary precautionary measures.[5]

Important notes

• Bankruptcy proceedings may not be filed against anyone other than a merchant or for non-commercial debts.[1][2].

• The court may declare bankruptcy on its own initiative if the conditions are met.[3]

• If the deceased merchant has heirs, they or some of them may request bankruptcy within one year of the death, with objections from the remaining heirs heard.[2][3]

These conditions ensure that a bankruptcy lawsuit in Egypt is only accepted if the failure to pay is genuine, the debt is commercial, and the legal procedures are completed in accordance with the law.