Cassation No

The conclusion drawn in the contested ruling is that the company in question faced a financial crisis, compelling it to liquidate assets to settle its outstanding debts. Numerous legal actions were initiated against the company and its two partners. However, the ruling determined that bankruptcy conditions did not apply to the two partners, leading to the company's bankruptcy without involving them. This conclusion is deemed correct.‌ The objection challenging the ruling's lack of prudence, based on the contention that bankruptcy conditions were applicable to both partners, lacks merit. It is highlighted that the bankrupt company possesses a distinct legal personality and separate financial liability. Furthermore, the appellants, identified as partners, are not considered general partners and bear liability for the company's debts with their own funds, thereby not being classified as merchants.

1- The provisions articulated in Articles 2/4 and 142 of Federal Decree-Law No. 9 of 2016 on Bankruptcy expressly specify that its regulations are applicable solely to individuals meeting the legal criteria for being designated as a merchant. This designation involves the engagement in commercial activities conducted in one's name, with a professional and exploitative approach. The legal status of a merchant is extended to include general partners in companies engaged in professional trade. 1- It is prescribed, as per the ruling of this court, that the declaration of bankruptcy is regarded as a penalty applicable exclusively to merchants who cease payment of their commercial debts due to a disturbance in their financial standing. The characterisation of a merchant is valid only for those engaging in professional trade, and the status of a professional trader is not assumed but shall be substantiated by the party making such a claim. Furthermore, it is stipulated that the bankruptcy of a company results in the bankruptcy of every general partner within it, signifying that a general partner in a commercial company is recognised as a merchant, thereby subject to the possibility of bankruptcy.

2- It is prescribed that the Federal Supreme Court is endowed with the authority to supplement any potential deficiencies that may exist in the contested ruling, provided that the ultimate conclusion it arrives at is legally sound and valid.

3- Given the evident facts presented in the contested ruling and the remaining case documents, it has been ascertained that the company [Name], registered with [Name] and possessing a licence issued under No. [Number], ‌is jointly owned by [Name] and [Name]. Established on 26/11/2001, the company operates in the domain of desalinating seawater, making it potable, sewage reclamation, solar energy electricity production, and environmental consulting. The company experienced robust operations and engaged in a substantial number of projects until the end of 2012. A severe crisis befell the company at the end of 2012, compelling it to liquidate its assets in response to mounting foreign debts and the necessity to settle fines imposed in criminal judgments. Consequently, the company ceased its operations, becoming embroiled in numerous legal actions alongside its partners. The cumulative outstanding obligations recorded in its accounts amounted to 20,861,292 dirhams. The ruling articulated that the aforementioned company engaged in commercial activities by nature and declared bankruptcy due to its failure to meet commercial debts, the cessation of its business operations, and the loss of confidence in its viability within the commercial market. These circumstances indicated a troubled financial position, resulting in a destabilized credit standing. The ruling further declined to declare bankruptcy for the two partners in the company, asserting that the conditions for their bankruptcy were not met, as stipulated in Article 142 of Law No. 9 of 2016 on Bankruptcy. The conclusions drawn in the contested ruling were underpinned by valid reasons substantiated by supporting documents. The appellants' objection, contesting the ruling's failure to recognize the fulfilment of bankruptcy conditions pertaining to them, is dismissed. This is because the company in question, in which they hold partnership, is a free zone company endowed with a separate legal personality. Its financial liability remains distinct from the individual liabilities of its partners. Each partner's responsibility is determined by their respective share in the company, applicable in relationships between partners and with third parties. Even if a partner assumes the guarantee of the company's debts to third parties, they are personally accountable within the limits of the guarantee contract. As the appellants are not general partners and are personally accountable for the company's debts, their classification as merchants is not warranted. Their involvement in establishing the company and claiming a share in its profits is not considered a commercial act with respect to them. It is emphasized that there is no inherent contradiction in the reasoning of the contested ruling. The decision to declare bankruptcy was grounded in expert evaluations of the company's financial predicament, while the refusal to declare bankruptcy for the two partners was based on the peremptory requirements outlined in Article 142 of Law No. 9 of 2016, which must be strictly adhered to. Consequently, the cassation is not accepted.

The provisions articulated in Articles 2/4 and 142 of Federal Decree-Law No. 9 of 2016 on Bankruptcy expressly specify that its regulations are applicable solely to individuals meeting the legal criteria for being designated as a merchant. This designation involves the engagement in commercial activities conducted in one's name, with a professional and exploitative approach. The legal status of a merchant is extended to include general partners in companies engaged in professional trade. It is prescribed, as per the ruling of this court, that the declaration of bankruptcy is regarded as a penalty applicable exclusively to merchants who cease payment of their commercial debts due to a disturbance in their financial standing.

The characterisation of a merchant is valid only for those engaging in professional trade, and the status of a professional trader is not assumed but shall be substantiated by the party making such a claim. Furthermore, it is stipulated that the bankruptcy of a company results in the bankruptcy of every general partner within it, signifying that a general partner in a commercial company is recognised as a merchant, thereby subject to the possibility of bankruptcy.

It is prescribed that the Federal Supreme Court is endowed with the authority to supplement any potential deficiencies that may exist in the contested ruling, provided that the ultimate conclusion it arrives at is legally sound and valid.

Given the evident facts presented in the contested ruling and the remaining case documents, it has been ascertained that the company [Name], registered with [Name] and possessing a licence issued under No. [Number], ‌is jointly owned by [Name] and [Name]. Established on 26/11/2001, the company operates in the domain of desalinating seawater, making it potable, sewage reclamation, solar energy electricity production, and environmental consulting. The company experienced robust operations and engaged in a substantial number of projects until the end of 2012. A severe crisis befell the company at the end of 2012, compelling it to liquidate its assets in response to mounting foreign debts and the necessity to settle fines imposed in criminal judgments. Consequently, the company ceased its operations, becoming embroiled in numerous legal actions alongside its partners. The cumulative outstanding obligations recorded in its accounts amounted to 20,861,292 dirhams. The ruling articulated that the aforementioned company engaged in commercial activities by nature and declared bankruptcy due to its failure to meet commercial debts, the cessation of its business operations, and the loss of confidence in its viability within the commercial market. These circumstances indicated a troubled financial position, resulting in a destabilized credit standing. The ruling further declined to declare bankruptcy for the two partners in the company, asserting that the conditions for their bankruptcy were not met, as stipulated in Article 142 of Law No. 9 of 2016 on Bankruptcy. The conclusions drawn in the contested ruling were underpinned by valid reasons substantiated by supporting documents. The appellants' objection, contesting the ruling's failure to recognize the fulfilment of bankruptcy conditions pertaining to them, is dismissed. This is because the company in question, in which they hold partnership, is a free zone company endowed with a separate legal personality. Its financial liability remains distinct from the individual liabilities of its partners. Each partner's responsibility is determined by their respective share in the company, applicable in relationships between partners and with third parties. Even if a partner assumes the guarantee of the company's debts to third parties, they are personally accountable within the limits of the guarantee contract. As the appellants are not general partners and are personally accountable for the company's debts, their classification as merchants is not warranted. Their involvement in establishing the company and claiming a share in its profits is not considered a commercial act with respect to them. It is emphasized that there is no inherent contradiction in the reasoning of the contested ruling. The decision to declare bankruptcy was grounded in expert evaluations of the company's financial predicament, while the refusal to declare bankruptcy for the two partners was based on the peremptory requirements outlined in Article 142 of Law No. 9 of 2016, which must be strictly adhered to. Consequently, the cassation is not accepted.