Analyzing the Risks of Transferring Assets and Receivables Between Related Companies During Liquidation
The study examines the risks arising from a creditor’s request that the liquidator review the debtor’s transactions with a company linked through common ownership. It explains that the letter does not, by itself, establish a violation, but opens a serious avenue for examination, particularly where funds, assets, projects, or receivables were transferred without a clear basis or fair consideration. The study concludes that the best defensive approach is to reconstruct the facts and documents and classify each transaction according to its level of exposure before providing any substantive statement.
Completed
August 2026
Jurisdiction
Saudi Arabia
Work type
Bankruptcy – Sister Companies – Risks
Document language
Arabic
Client type
Contracting company
The matter
**Issue:**
The issue concerned a request by a creditor of the company undergoing liquidation that the liquidator verify whether funds, assets, projects, or receivables may have been transferred to another company connected to the debtor through a common owner, and whether this constituted a voidable transaction or grounds for a recovery claim.
**Challenge:**
The challenge was to distinguish between the mere existence of an ownership relationship or connection between the two companies and an actual transfer of economic value belonging to the debtor without a legitimate basis or fair consideration, while building a document- and fact-based defensive position before providing any substantive statement to the liquidator.
Work performed
CounselO addressed the matter through a **legal and defensive risk analysis** before any substantive statement was submitted, by:
* Treating the creditor’s letter not as an established allegation, but as an indicator requiring examination.
* Assessing the procedural impact of the creditor’s request on the liquidation process.
* Identifying the areas of greatest exposure, including receivables, assets, projects, equipment, and employees.
* Simulating in advance the review that the liquidator might conduct.
* Linking each transaction to its supporting documents, commercial rationale, and fair consideration.
* Classifying transactions by risk level as **green, yellow, or red**.
* Preparing an internal checklist to support an organized defensive position.
In short: **CounselO’s work consisted of developing a proactive, document- and fact-based defensive assessment of the risks before the creditor’s request developed into a claim or actual dispute.**
Outcome or value delivered
**The value delivered by CounselO** consisted of converting the creditor’s letter from a general source of concern into an **organized review and defense plan** that helped the client understand the actual level of risk before responding or taking a position.
The value specifically included:
* **Assessing the legal and procedural risk** arising from the creditor’s request.
* **Distinguishing allegations from evidence**; the letter did not establish a violation but opened the door to examination.
* **Identifying the areas of greatest exposure**, including receivables, assets, projects, equipment, and employees.
* **Building a document-based defensive methodology** rather than relying only on impressions or the relationship between the two companies.
* **Classifying transactions by risk level** as green, yellow, or red.
* **Preparing an internal checklist** to support readiness for any request from the liquidator.
* **Reducing the likelihood of surprise or escalation** through a proactive review before providing any substantive statement.
In short: **CounselO’s value was to provide a proactive legal assessment that reduced risk, organized the documents, and built a clear defensive position before the review developed into a claim or dispute.**
This sample demonstrates professional experience only. Details may be modified or withheld to protect confidentiality, and past work or outcomes do not guarantee the result of another matter.