Kuwait Court of Cassation principle number 3622

Law 41 of 1993 concerning the State’s purchase of certain debts and the manner of their collection. Its purpose: establishing rules ensuring the State’s collection of the purchased debts to safeguard public funds and granting customers genuinely committed to repaying their debts appropriate facilities for the prompt payment of their debts in accordance with the methods and deadlines specified in this Law. The condition for this. The customer’s authentication of an acknowledgment of his indebtedness and expression of his wish to choose a method for repaying his debt within the prescribed deadlines. Failure to express that wish or failure to comply with payment deadlines. Its effect. The debt becomes due, and he is obliged to pay it, its accessories, and whatever may have been waived from it up to the date of payment. The Kuwait Investment Authority may not effect a composition to avert bankruptcy; it may only submit its proposal concerning it to the court. - The contested judgment’s reversal of the judgment under appeal declaring the bankruptcy of the company and its joint and several guarantor, and its approval of a composition to avert bankruptcy in respect of the guarantor, on the grounds that the company had paid the equivalent of the immediate cash settlement amount, that the Kuwait Investment Authority did not object to concluding a preventive composition with the guarantor, and that the Authority’s interest in having the company declared bankrupt was not commensurate with the latter’s interest. An error in the application of the law. The reason for this. It adopted a meaning of cessation of payment different from that prescribed by Law 41 of 1993 and contrary to its provisions stipulating that the Kuwait Investment Authority may not undertake cash settlements of debts or reschedule them outside the scope of that Law. To hold otherwise would place a debtor who ceases payment until after the prescribed deadlines in a better position than one who delays for a limited period permitted by law.