Kuwait Court of Cassation principle number 3699

Issuance of a judgment declaring bankruptcy. Its effect. The bankrupt's creditors are barred from bringing actions against him and taking proceedings against his assets, and actions and proceedings pursued individually by each creditor are stayed to protect creditors and ensure equality among them, as they are subject to pro rata distribution among creditors so that each obtains a share of the bankruptcy estate's assets. Exception. Secured creditors holding pledges or mortgages and holders of special preferential rights. They may bring actions and continue them 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 whosoever's hands they may be, as an exception to the rule that general preferential rights do not give rise to a right of pursuit; and including that these preferential rights rank ahead of any other preferential right over immovable property or any registered mortgage right, irrespective of the date of its registration. Consequence thereof. The 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 actions and continue them against the bankruptcy administrator. The challenged judgment's departure therefrom. An error necessitating its cassation.