EGYPT Law and Practice Contributed by: Sherif El Hosseny, Malak El Amiry and Farida Degheidy, Matouk Bassiouny & Hennawy
The rules of bankruptcy are that the debt must be current, undisputable, and due. Also, there should be evidence that the debtor is unable to pay such debt due to its distressed financial position. The law further stipulates that a company is consid - ered in a state of bankruptcy if it stops paying its debts due to its financial distress. There is a specific time- period with respect to establishing whether a com - pany should file for bankruptcy, which shall be within 15 days from the date it stopped paying its debts as a result of disruption in its financial position. The trader is declared bankrupt at its own request, the request of one of its creditors or that of the Public Prosecutor. Where a company’s loss reaches 50% of its issued capital, an extraordinary general assembly of the company shall convene to look into the dissolution or continuation of the company. A lessee may be liquidated by (i) its dissolution, (ii) the lapse of its term under its by-laws, and (iii) the completion of its company objective. The liquidator is either appointed by the company’s shareholders or by virtue of a court order. 2.9.3 Co-Ordination, Recognition or Relief in Connection With Overseas Proceedings The co-ordination, recognition or relief in connection with oversees proceedings is done on a case-by-case basis. There are certain arrangements or treaties on a bilater - al, regional or international level whereby the relevant Egyptian authorities, such as the Ministry of Justice, the Public Prosecutor and the Central Bank of Egypt co-ordinate with their foreign counterparts. As to enforcement of court judgments and arbitral awards please see 2.6.6 Domestic Courts’ Recogni- tion of Foreign Judgments/Awards . 2.9.4 Effect of Lessee’s Insolvency on a Deregistration Power of Attorney In general, the courts will recognise a DPOA provided that it is duly registered and notarised.
There is a suspect period to be determined by the court, but in any event, it may not be traced back to more than two years from the date the bankruptcy judgment is issued. In that regard, the law provides that any transaction conducted during the suspect period under a bankruptcy scenario may be nullified if it is evidenced that it was conducted against the interests of the creditors and that the other party was aware of the financial status of the bankrupt entity acting in bad faith. Under a liquidation scenario, it is presumed that the appointed liquidator should adhere to all obligations assumed before the liquidation process up until liqui - dation is concluded. 2.9.5 Other Effects of a Lessee’s Insolvency If the lease calls for termination of the contract in the event of bankruptcy, then such a provision would be respected by Egyptian courts and the bankruptcy trustee would be bound thereby. However, if the con - tract is silent on termination for bankruptcy, then pur - suant to Egyptian law, the bankruptcy judgment does not require the termination of a binding contract to which the bankrupt is a party, unless such contract is based on personal considerations. The law further provides that if the bankruptcy trustee does not per - form or does not continue the performance of the contract, the other party to the contract may request the termination of the contract, and that any decision taken by the bankruptcy trustee with regards to the contract must first be presented to the bankruptcy judge for their approval. The lessor may be delayed or prevented from repos - sessing the aircraft. The aircraft may be deemed part of the lessee’s prop - erty. In this case the aircraft owner would be entitled by law to repossess the aircraft without the need to have a mortgage thereon if the Lessor can prove own - ership thereof. Accordingly, the aircraft owner would need to provide evidence to the court and bankruptcy trustee evidencing its ownership of the aircraft. A bill of sale that is notarised and legalised up to the level of the Egyptian Embassy/Consulate in the country of issuance may be sufficient evidence for the judge to exclude it from the bankruptcy process. The les -
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