Monday 05 / January / 2026
Muscat: Commercial bankruptcy is a key issue in the business environment due to its direct impact on market stability and investor confidence.
In the Sultanate of Oman, it is considered pivotal for consolidating market competitiveness and ensuring a fair investment climate in line with the objectives of Oman Vision 2040.
In 2019, Oman issued the Bankruptcy Law under Royal Decree No. 53/2019, which came into effect in July 2020.
The law aims to enhance the business environment by providing legal protection for debtors and creditors, regulating bankruptcy procedures transparently, and allowing distressed companies to restructure instead of liquidating.
It also prioritises employee entitlements and sovereign obligations while promoting competitive fairness and reducing the stigma associated with commercial bankruptcy.
Mechanisms for business continuity
The law introduces several mechanisms, including preventive settlement, restructuring, and, if necessary, formal bankruptcy procedures.
These measures help companies manage financial distress, protect creditors’ rights, and support the continuity of economically viable businesses. By providing opportunities for restructuring, the law contributes to strengthening investor confidence, enhancing transparency, and supporting economic resilience.
Legal and market impact
Mohammed bin Salem Al Hashmi, Director of the Department of Control of Commercial Establishments at the Ministry of Commerce, Industry and Investment Promotion, told ONA that the Bankruptcy Law is a pillar for regulating the business environment and enhancing investor confidence.
He explained that the law redefines bankruptcy as a tool for debt restructuring, not the end of economic activity, and ensures priority for employees’ entitlements and sovereign obligations.
He noted that commercial bankruptcy arises when a merchant cannot meet commercial debt obligations, requiring legal measures to balance the rights of debtors and creditors.
Key causes include failure to adopt innovative business practices, high operating costs, liquidity challenges, and exposure to global economic fluctuations.
Weak financial planning, poor cash flow management, and limited awareness of the legal protections available also contribute to business failure.
Strategic role in Oman 2040 Vision
The Bankruptcy Law is expected to serve as a strategic tool for market regulation and for balancing creditor protection with the continuity of institutions.
The next phase emphasises judicial and digital infrastructure development, enhanced economic reintegration tools, and stronger coordination between government and financial institutions to create a flexible, transparent, and competitive business environment.
Dr. Khalid bin Saeed Al-Amri, Chairman of the Board of Directors of the Omani Economic Association, said the law reflects a qualitative shift in Oman’s economic legislation. It provides a clear legal framework to manage commercial bankruptcy efficiently and transparently, supporting job security, encouraging restructuring over liquidation, and maintaining market confidence. He emphasized that the law ensures a safe roadmap for investors and enhances Oman’s position as a competitive investment destination in the region.
The law has helped transform commercial bankruptcy from a source of financial risk into an opportunity for reorganization and renewed growth, aligning with Oman’s long-term economic vision.
