Kuwait Court of Cassation principle number 881

Issuance of a judgment declaring bankruptcy. Its effect. The bankrupt's creditors are barred from bringing actions against him and taking measures against his assets, and actions and measures undertaken by each creditor individually are stayed, to protect creditors and achieve equality among them, as they are subject to a pro rata distribution among creditors so that each receives a share of the bankruptcy estate. The exception. Secured creditors holding pledges or mortgages and holders of special preferential rights. They may bring and continue actions against the bankruptcy trustee. - Preferential rights securing the Public Treasury. The legislature singled them out for exceptional rules, including collection of sums due to the Public Treasury from the proceeds of assets encumbered by them, in whosoever's hands they may be, as an exception to the rule that general preferential rights do not entail a right of pursuit; and that these preferential rights rank ahead of any other real-property preferential right or any registered mortgage right, regardless of its registration date. The implication thereof. The governmental entity that is a creditor for sums due to the Public Treasury has the same right as a secured creditor and a holder of a preferential right to bring and continue actions against the bankruptcy trustee. The challenged judgment's contravention thereof. An error requiring its cassation.