OMAN Law and Practice Contributed by: Ahmed Said Al Jahwari, Idil I. Kaner and Al Muhalab Al Issai, Dr. Ahmed Said Al Jahwari & Partner Law Firm
6.4 A Foreign Private Credit Lender’s Ability to Enforce Its Rights A foreign private credit lender’s ability to enforce rights under a loan or security agreement may be affected if the borrower enters bankruptcy, as claims and asset realisation must be determined in accordance with Oman’s insolvency framework. Defects in registration or perfection, such as unauthorised signatories, incor - rect registration of securities, or expiry/non-renewal, can undermine priority and enforceability. Securities granted without the necessary board/shareholder approvals may also be challenged as unenforceable. Even with a foreign judgment, enforcement requires compliance with conditions such as proper service, jurisdiction, and, where applicable, reciprocity. Prac - tical constraints, including potential court delays, expert valuations, auctions, and debtor challenges, may further affect the timing and efficiency of enforce - ment. 6.5 Timing and Cost of Enforcement The costs and duration of the enforcement process are highly fact-dependent, but because security enforcement typically requires court involvement and asset sale procedures, end-to-end enforcement can be lengthy and costly, particularly if contested. Expe - diting enforcement requires careful legal drafting from the outset, including correct documentation, proper registration and perfection of security, and clear default and acceleration provisions to reduce pro - cedural disputes. Typical enforcement costs include security registration, court fees, expert valuations, legal fees, auction costs, and translation expenses. Out-of-court restructurings are often used to reduce delays and minimise costs compared to immediate court proceedings. Cost-management strategies include staged enforcement, use of alternative dis - pute resolution mechanisms, and prioritising control security such as shares or receivables to avoid value- destructive asset sales. It is likely that the duration of enforcement processes may be significantly reduced in the coming months. Oman has introduced reforms to its judicial frame - work to improve efficiency, including the creation of the Court of Trade and Investment. The new Court is expected to provide specialised judicial expertise for business disputes and modernise procedures through
its electronic platform, enabling faster dispute resolu - tion and more predictable outcomes. 6.6 Practical Considerations/Limitations on Enforcement Enforcing against operating assets can often be value- destructive, which has led lenders to increasingly pre - fer workouts and governance/control solutions before pursuing liquidation. Court proceedings in Oman can be time-consuming, especially when contested by the debtor; to mitigate this, lenders typically take multiple layers of security and ensure that perfection is prop - erly completed. Share pledges or equity cures may require shareholder actions, which can be managed through undertakings, enforceable voting arrange - ments, and carefully drafted conditions precedent. Foreign lenders can address operational constraints by appointing strong local counsel and incorporating arbitration provisions in loan agreements. Oman’s Bankruptcy Law provides structured pro - cedures, including preventive composition, restruc - turing, and liquidation. The commencement of such insolvency/restructuring proceedings affects a lend - er’s ability to enforce its loans, security, or guarantees, as creditor actions are generally channelled through a collective process where claims and asset realisa - tion are managed by the insolvency framework. These processes may include a stay on enforcement, par - ticularly under preventive composition or restructuring procedures, which are designed to provide alterna - tives to immediate liquidation. Court-appointed offi - cials, such as administrators, trustees, or liquidators, typically control the process and are appointed by the court in accordance with the law. Recent government guidance has emphasised stakeholder rights and pro - cedures, reflecting a policy focus on structured insol - vency resolution. 7.2 Waterfall of Payments 7. Bankruptcy and Insolvency 7.1 Impact of Insolvency Processes Creditors in Oman are generally paid on a first-to-per - fect basis. However, certain junior claims are almost always addressed despite their position in the water - fall. Employee and government claims are typically
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