When a merchant ceases to pay their debts and is on the verge of bankruptcy, they seek a way to avoid a formal declaration of bankruptcy and its consequences.

A declaration of bankruptcy results in the names of merchants who have been declared bankrupt and have not regained their standing being listed on a schedule posted on the door of every court and in the public hall of all stock exchanges.

The bankrupt's political rights are forfeited upon declaration; they may not vote or be elected to political, municipal, or professional councils, nor hold a public office or function.

Inevitably, from the date of its issuance, the bankruptcy judgment requires the bankrupt to hand over the management of all their assets, including those that may be acquired during the bankruptcy period, to bankruptcy trustees. The administration of the bankrupt's assets is given to a paid agent called a bankruptcy trustee. The bankrupt is not allowed to sell any of their assets and cannot litigate in court except as an intervenor in cases brought by the trustees. Litigation is confined to the debts owed by the bankrupt. The bankruptcy judgment is registered in the land registry, and this registration creates a compulsory security for the benefit of the creditors' estate from its date.

In its bankruptcy ruling, the court must order the sealing of assets. It has the right at any time to compel the bankrupt's attendance and to detain them. In any case, the bankrupt may not leave their place of residence without the permission of the delegated judge.

This is in addition to the psychological and social effects of bankruptcy, as it was considered a disgrace for a merchant, as well as the economic consequences, especially if it involves a commercial enterprise that employs a large number of workers or produces goods that impact the economy.

The number of bankruptcies has increased in several countries. In England and Wales, the number of commercial institutions that became insolvent during the last quarter of 1994 reached 3,600, and this number was 3,534 during the first quarter of 1995. The number of individual bankruptcies during the first quarter of 1995 was 6,258. The number of individual bankruptcies and insolvencies among British companies from 1990 to 1994 were 15,051, 21,827, 24,425, 20,708, and 16,728, respectively.

Official statistics also showed that Chinese courts approved 536 bankruptcy cases during the first eight months of 1994, an 80% increase from 1992. Bankruptcy cases in China increased by 32% in 1995.

The number of bankrupt companies in Japan rose, with the percentage of Japanese companies declaring bankruptcy in 1994 doubling compared to 1993. In the first half of 1995, debts resulting from bankruptcies in Japan increased by 48.65% compared to the same period in 1994.

In Egypt, bankruptcy cases rose to 12,000 in 1994, compared to 6,000 in 1993. The number of cases during the first seven months of 1995 reached 7,453 and increased by 3.9% in the first nine months of 1996.

To protect merchants from bankruptcy, many legislations have adopted a legal system to prevent it. This system is the 'Preventive Composition from Bankruptcy,' which aims to serve the interests of both the merchant and the creditors. It protects the merchant from bankruptcy and its effects, and shields creditors from lengthy bankruptcy procedures and their exorbitant costs. Under this system, the merchant remains in control of their business, which increases the likelihood of repayment.

The Jordanian Commercial Law has adopted the system of preventive composition, dedicating the first section of its fourth book to it under the title 'Preventive Composition' in Articles 290 to 315, and the fifth book under 'Precautionary Composition' in Articles 459 to 488.

The Tunisian legislator also adopted this system, addressing it in the first title of the fourth book of the Commercial Code under 'Precautionary Composition' in sections 413 to 444. The Tunisian legislator continued with this until 1995, when this system was abolished and replaced by a system for rescuing enterprises facing economic difficulties.

The Egyptian legislator dedicated Law No. 56 of 1945 concerning Preventive Composition from Bankruptcy to this system.

As the subject of this research is 'Preventive Composition from Bankruptcy,' it is confined to this topic. It does not include simple composition or composition by the bankrupt's surrender of assets, which are considered solutions to bankruptcy.

Also outside the scope of this research is the discussion of bankruptcy provisions. Although the topic is preventive composition, its scope is limited to that alone.

However, a complete study of preventive composition requires an examination of the system's effectiveness and the extent to which it achieves its goals.

Bankruptcy is no longer considered a disgrace for a merchant; it is now used to get rid of debts, often resulting in creditors receiving only a small fraction of the principal debt.

Additionally, the long and complex procedures of bankruptcy have become an obstacle for creditors in obtaining their rights.

• ISBN: 9789957160173
• Weight: 0.700 kg
• Size: 17×24 cm
• Paper: White
• Pages: 272
• Year of Publication: 2009
• Binding: Hardcover