BAHRAIN Trends and Developments Contributed by: Mohamed Ali Shaban and Sayed Mohsin Alalawi, Hassan Radhi & Associates
ously that car might have been auctioned in a single afternoon session with only those who showed up. iii) Speed and efficiency Mazad’s involvement has significantly shortened the timeline for converting seized assets into cash. Once an asset is attached by the private enforcer and cleared for sale, Mazad can often schedule an auction within days or weeks, compared to months of waiting under the old court-run system. The lengthy judge- led auction process – with court approvals at each step and limited auction dates – has been replaced by a streamlined procedure where the judge’s role is primarily to approve the sale result rather than micro - manage the auction. This means that creditors get proceeds faster and cases move to resolution more quickly. iv) Transparency and fairness Having a neutral, specialised entity such as Mazad conduct the auctions helps ensure that fair market value is obtained in an open process. All auctions are public (and are often publicised on Mazad’s platform), reducing the risk of any perception of insider deals or non-transparent sales that sometimes plague in-court auctions. The execution court still supervises to an extent – for instance, it will set any reserve price or minimum bid requirements and confirm the final sale – but Mazad handles the bidding process profession - ally. This public-private synergy promotes confidence that seized assets are sold for a fair price under com - petitive bidding, which is important for both sides: the creditor wants maximum recovery, and the debtor is entitled to not have their property sold for an unrea - sonably low price. Replacing the old courthouse auctions The difference between the past and present is per - haps most vividly seen in how a property foreclosure is handled. Before 2022, if a creditor enforced a judg - ment against a debtor’s real estate, the court would announce an auction to be held at the courthouse. A judge would convene the auction, often on a morn - ing with a handful of bidders present, and if the bids were too low (below appraised value) the judge might
postpone the sale to another date. This could repeat multiple times, dragging out the enforcement for many months or even years in complex cases. Debt - ors sometimes remained in possession of properties during these delays, and creditors saw diminishing prospects of recovery. Now, under the new system, that same property would be handed to a private enforcer, who would co-ordinate with Mazad to list the property in a timely public online auction. Interested buyers get ample notice through Mazad’s marketing, and they can bid from anywhere. When the auction closes, the high - est bid is reported to the execution judge, who can quickly ratify the sale and order the proceeds distrib - uted. What used to be a judge-centric process is now a business-centric process – leveraging the auction company’s expertise to handle the sale efficiently, with the judge maintaining only an oversight role. This has eliminated the backlog of unsold assets and reduced the administrative burden on the courts. One indicator of success is that, since Mazad took over auctions, auction cycles that once took six to 12 months or more just to auction the asset have been shortened to a matter of weeks in many cases, barring any legal objections from the parties. For businesses in Bahrain, involvement in litigation that results in asset seizure now typically leads to the sale of those assets to be handled by Mazad. For example, if a business wins a lawsuit and enforces the judgment, and the debtor’s warehouse of goods leads to a seizure issued to settle the judgment, those goods might be auctioned on Mazad’s site to convert them to cash. Conversely, if a company is subject to a judgment and is unable to pay, its assets could be swiftly taken and sold through a public auction pro - cess, which leaves little room to hide assets or delay the inevitable sale. Conclusion: a transformed enforcement landscape Since the 2022 execution law reform, Bahrain’s approach to enforcing judgments has undergone a remarkable transformation, driven by private sector engagement and digital innovation. In just over three years, the execution process has evolved from a slow, court-bound procedure into a more dynamic system where private enforcement firms, a credit bureau and
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