Kuwait Court of Cassation principle number 1866

Issuance of a judgment declaring bankruptcy. Its effect. Depriving the bankrupt's creditors of the ability to bring actions against him and take proceedings against his assets, and staying actions and proceedings undertaken by each creditor individually, to protect creditors and achieve equality among them, as they are subject to pro rata distribution among creditors so that each receives a share of the bankruptcy estate. Exception. Secured creditors holding pledges or mortgages and holders of special preferential rights. They may bring and continue actions against the bankruptcy administrator. - Preferential rights securing the Public Treasury. The legislature accorded them exceptional rules, including recovery of amounts due to the Public Treasury from the proceeds of assets encumbered by them, in whosesoever 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 preferential right over immovable property or any registered mortgage right, regardless of its registration date. Implication thereof. A government entity that is a creditor for amounts due to the Public Treasury has the same right as a secured creditor holding a pledge or mortgage and a holder of a preferential right to bring and continue actions against the bankruptcy administrator. The challenged judgment's contravention thereof. An error requiring its cassation. - 325 - Commercial