Bankruptcy and preventive reorganization issues in Egypt are regulated by Title 5 of the Commercial Code (Law No. 17 of 1999). The Code went into effect on October 1, 1999 and superseded the old Commercial Code of 1883. According to the "Doing Business Indicators" published by the World Bank, closing a business in Egypt is a lengthy and costly process. Out of 175 countries surveyed, Egypt ranked 125th. However, there insufficient information publicly available regarding Egypt's compliance with the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank.

General Overview

Bankruptcy and preventive reorganization issues in Egypt are regulated by Articles 550 - 772 of Title 5 of the Commercial Code (Law No. 17 of 1999). The Code went into effect on October 1, 1999 and superseded the old Commercial Code of 1883. Certain provisions in the Penal Code define sanctions for fraudulent bankruptcies. As is indicated on the World Bank's Global Insolvency Law Database (GILD) website, the Commercial Code applies for "trader's bankruptcy," while "non-traders insolvency" is governed by the Articles 249-264 of the Civil Code. A court may find a non-trader insolvent if his debts exceed his assets, while a trader may be found guilty in the case of a deep business trouble even if he has enough assets to cover his debt. Bankruptcy, according to the Commercial Code, is "a collective regime to liquidate the assets of the debtor who fails to pay his commercial debts as they become due."

According to the GILD website, filing a petition for judgment does not result in a debtor's bankruptcy, rather a debtor is pronounced bankrupt when a court issues its judgment. Bankruptcy procedures can be initiated by a creditor, a debtor, the prosecution office, or by a court itself. After the judgment has been issued, the debtor can start liquidation procedures or submit a reorganization plan which must be approved by the majority of creditors or by the bankruptcy court. Liquidation procedures are stipulated in the Commercial Code and are usually initiated by unsecured creditors. The Egyptian Commercial Code provides for the following reorganization schemes: (1) termination of the estate for the lack of the masse creditors' interest; (2) composition: (3) preventive organization plan; (4) simple judicial reorganization; and (5) abandonment for the benefit of creditors.

The World Bank and the International Finance Corporation compile the Doing Business Index. One of the factors is "Closing a Business." In 2006, out of 175 countries surveyed, Egypt ranked 125th. The process of closing a business in Egypt takes 4.2 years and costs 22% of the estate value. The recovery rate, expressed in terms of how many cents on the dollar claimants recover from the insolvent firm, is 16.6. In comparison, the regional average and Organization for Economic Co-operation and Development (OECD) countries' average are 3.1 years and 1.4 years respectively, the associated costs are 12.1% and 7.1% and the recovery rate 25.7 and 74.