In the Name of Allāh,
the Entirely Merciful, the Especially Merciful
Praise is due to Allāh, Lord of the worlds, may the blessings and peace be upon our master Muḥammad, the last of prophets, on his family, and all his companions.
Resolution No. 218 (2/23)
Rulings on Insolvency and Bankruptcy in Shariah and Contemporary Systems
(Continuation to the Previous Resolution)
The Council of the International Islamic Fiqh Academy of the Organization of Islamic Cooperation, holding its 23rd session in al-Madinah al-Munawwarah, Kingdom of Saudi Arabia, on 19–23 Ṣafar 1440h (28 October – 1 November 2018),
Having reviewed the recommendations issued by the scientific symposium on the Rulings on Insolvency and Bankruptcy in Shariah and Contemporary Systems, held by the International Islamic Fiqh Academy in Jeddah, in collaboration with the Islamic Research and Training Institute of the Islamic Development Bank Group on 31 November – 1 December 2017.
Having listened to the in-depth discussions on the subject,
Resolves
First: confirmation of the Academy resolution no. 186 (1/20) statement on the definition of insolvency and insolvent debtor. In determining the applica- tions of insolvency, customary practices should be taken into account.
Second: confirmation of paragraph (2) of the resolution mentioned above on the criteria of bankruptcy, while taking into account the following:
- No bankruptcy without a judicial
- Rulings on bankruptcy apply for both natural and legal persons.
Third: confirmation of paragraphs (2), (3), and (4) of the resolution men- tioned above.
Fourth: some insolvency and bankruptcy issues in Islamic financial insti- tutions are as follows:
- A default in payment (of due obligations) is insolvency. It cannot be considered bankruptcy in the Shariah perspective if the assets owned by the institution or the company fulfil its The creditor may recourse to the court for issuance of a bankruptcy decree. The indebting company
or institution may also recourse to court in order to obligate creditors for restructuring.
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Some suggested solutions to solve insolvency (default/difficulty) in Islamic financial institutions and companies are as follows:
- Submitting a particular financial asset or a usufruct of a specific asset for the payment of the due debt.
- Transforming debts into shares (capitalization) through increasing the capital of the indebted company by issuing ordinary shares which the creditor contributes with his debt owed by the company. Then, he would turn into an owner of a portion in the company and its assets at the same amount the debtor company owed him.
- An agreement between the debtor company or institution with the cred- itor on restructuring according to how an acceptable, reliable expert ref- erence estimates the company’s situation and determines the conditions of restructuring if the need arises.
Recommendations
- Undertaking extensive studies on the practical solutions for insolvency in financial institutions to preserve the rights of all parties.
- Drawing attention to introducing regulations and laws that protect cred- iting and debiting clients of the company while taking into consideration the preservation of all related parties’ rights to rectify their financial
- Concerned authorities, particularly judicial authorities, to give attention to judicial principles which keep pace with contemporary developments in the field of insolvency and
- The Secretariat of the Academy to continue studying the effects of insol- vency and bankruptcy on limited liability companies, including the case when its majority owner is still at financial ease.
Indeed, Allāh is All-Knowing.
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Secretary‑General of the Academy Visits the Consulate General of the Hashemite Kingdom of Jordan His Excellency Professor Dr. Qutb Mustafa Sano, Secretary‑General of the Academy, paid an official visit on 29 Sha‘ban 1447 AH, corresponding to 17 February 2026, to the Consulate General of the Hashemite Kingdom of Jordan in Jeddah. His Excellency and his accompanying delegation were received by His Excellency Ambassador Mohammed Salah Sobhi Hameed, Consul General and Permanent Representative of Jordan to the Organization of Islamic Cooperation, who welcomed him warmly and expressed his pleasure at the visit. He praised the distinguished intellectual efforts undertaken by the Academy under His Excellency’s leadership in addressing numerous religious and intellectual issues of concern to the Islamic world, affirming his personal honor in meeting His Excellency again and Jordan’s keenness to strengthen channels of communication and cooperation with the Academy, especially in areas of mutual interest. For his part, His Excellency expressed his deep gratitude and great appreciation to the Ambassador for the warm reception and generous hospitality. He commended the tremendous support, gracious care, and continuous attention the Academy has received from the leadership and people of Jordan since its establishment. He also conveyed his sincere appreciation for the Ambassador’s recent visit to the Academy, affirming the Academy’s full readiness to do everything that would enhance partnership, cooperation, coordination, and communication between the Academy and Jordanian religious and academic institutions. His Excellency was accompanied by Mr. Mohammed Al‑Mundhir Rida Al‑Shawk, Director of the Office and Protocol; Mr. Mohammed Waleed Al‑Idrisi, Director of Media and Public Relations; Ms. Sarah Amjad Badawi, Director of the Department of Family, Women, Children, and the Elderly; and Mr. Amjad Ibrahim Al‑Mansi, Head of the Protocol Section.
