What is short selling .

Document Type : Original Article

Author

Faculty of Law - Mansoura University

Abstract

The issue of commercial debts is one of the most important and dangerous issues facing commercial institutions, as it is one of the most important factors that ultimately lead to their default and bankruptcy, and expose them to the risk of liquidation and seizure of their in-kind and movable property. Commercial transactions often require enterprises to deliver expeditiously with deferred payment, and to do so they issue deferred invoices to their customers. The most serious of which is the debtor's refusal to pay when it falls due, or his fall into bankruptcy and judicial liquidation of his property, which makes the creditor in a state of competition with other creditors, who may equal or exceed him. To avoid such a notification, economic and commercial institutions resort to searching for sources of financing to restore their productive cycle and reduce the percentage of financial deficit related to deferred bills, by resorting to banks and financial institutions, in order to obtain short- or medium-term loans. However, the solution of resorting to borrowing did not contribute to solving the problem of financial balance For economic institutions, but to play the role of circumstantial housing only, as resorting to bank borrowing usually places additional costs and burdens on these institutions, represented in the exorbitant interest and commissions demanded by the bank on the one hand, and the long and strict procedures imposed by financial institutions on the other.

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