Egypt adopts law to rescue distressed small and medium enterprises

Egypt's Parliament passed a law governing the financing of distressed medium, small and micro enterprises. The legislation defines a project as distressed if it has been declared bankrupt or if its financial condition threatens imminent default. In such cases, an auditor registered with the Central Bank of Egypt or the Financial Regulatory Authority must issue a report before funding can be granted.

The law sets a hierarchy for repayment: first to the Treasury for taxes and fees, then to secured creditors, and finally to the financing authority. It also allows the financing authority to replace a secured creditor through a documented agreement, provided the arrangement is dated and recorded. The aim is to restore activity, preserve jobs and support economic development while preventing fraud or collusion.