Small Business Bankruptcy Reform In the Arab World: Two Steps Forward, One Step Back

Abstract

This article assesses a series of recently adopted bankruptcy laws in the Arab world, situating them within three historical phases of global bankruptcy reform. It introduces recently released recommendations from international standard-setting organizations for best practices in the bankruptcies of small and medium enterprises (SMEs) and applies them to evaluate the key details of recent bankruptcy reforms in Saudi Arabia, the United Arab Emirates, Egypt, Morocco, Tunisia, Oman, and Bahrain. Seeking an explanation for the persistent absence of an especially crucial element of effective SME rescue policy, it recalls the Islamic Law relating to debt distress and recovery. Finally, it reveals a revolutionary new approach to this controversial topic, adopted by one Arab state to produce a bankruptcy law that is truly and exceptionally responsive to the needs of SMEs.