The UAE has issued new legal legislation, which is a bankruptcy law that protects the rights of all parties, especially creditors and debtors, because its legal stipulations enable debtors to fulfill their obligations over a longer period of time, and they can continue their business and not have to leave the country as a result of the failure of their business.
With the entry into force of the new bankruptcy law No. (9) of 2016, it has become a lifeline in many cases for entrepreneurs who face difficult financial challenges, and entrepreneurs and investors in the United Arab Emirates felt more protection in the market, because it limits the manipulation of companies located in Market without financial cover.
The law includes commercial companies that are governed by separate financial insolvency systems, especially small and medium enterprises except those registered with the Dubai World Center and Abu Dhabi Global Market, and also paves the way for financial insolvency in cases of debt exceeding 100 thousand dirhams (about 27 thousand dollars) in case If he fails to pay it within thirty days. The law also includes measures to implement bankruptcy prevention, financial restructuring, development of new financial resources, and liquidation of troubled and debtor companies.
The strength of this law lies in the removal of criminal offense from the time period of returned checks issued by insolvent companies subject to restructuring by judicial order. On the broadest level, the new law includes a more organized and structured schedule to rescue companies in critical financial situations.
Debtors who initiate bankruptcy or other procedures within 30 days of being considered insolvent benefit from protection from criminal penalties and from claims filed against them by creditors. However, in the event that this period and liquidation cases are exceeded within 45 days of default, the law includes provisions that are subject to judicial prosecution by creditors for bankruptcy resulting from negligence, the penalty of which may reach imprisonment of up to two years. It is up to the court to decide on the issue of strict punishment.
The existence of the new bankruptcy law has positive impacts on the economy in general, as it protects the rights of creditors, the interests of troubled merchants together, and the reorganization of the companies ’business, so as to facilitate the procedures for registration, exit, and movement between different economic sectors. Whereas, some of its articles stipulated giving a deadline to the troubled companies through which the judicial conciliation can be reached.
Emerging companies facing financial difficulties will not simply leave the country to try to restructure their financial conditions remotely. Under the legal protection that the new bankruptcy law imposed, these companies have enough time to pay off the debt and restructure.
Experts believe that bankruptcy laws give flexibility to the movement of the economy and enable investments to deal with credit difficulties in an organized manner that guarantees the fulfillment of obligations and thus reduces losses resulting from defaulting of debtors, ensuring that creditors have a legal mechanism to access their rights. And the international experiences of bankruptcy laws guarantee in many cases protection from creditors, which is in the interest of the economy in general and gives an opportunity to debtors in order to re-arrange their positions in a way that guarantees creditors themselves ultimately accessing the largest possible amount of money owed to them instead of losing them entirely in the event that debtors are pursued.
Our Service in Bankruptcy Cases
We at Juma Al Naqbi advocates and Legal Consultants are working on studying our clients ’files and applying the provisions in bankruptcy law and its legal rules to ensure the best results and benefits in order to maintain the continuity of their business and their lives normally.
Confronting bankruptcy is stressful and worrying for you – let the Juma Al Naqbi advocates and legal consultants help you to minimize the permanent damage to your health and finances when you declare bankruptcy.
Bankruptcy is the process of providing protection to people who are no longer able to pay their debts when due.
A person’s bankruptcy may be declared voluntarily, or by the submission of an application, or by a court order incited by a creditor. A trustee is appointed for a bankrupt person for a period of no less than three years. Values control their properties and describe the assets to distribute them equally to unsecured creditors (creditors who do not maintain a debt security).
The effect of bankruptcy is that unsecured creditors are generally unable to initiate or continue debt recovery procedures, even though the rights of secured creditors are not affected.
Juma Al Naqbi advocates and Legal Consultants has an experienced team that helps trustees, creditors and debtors in providing advice and legal representation on all aspects of personal bankruptcy.
We will advise the trustees regarding their legal obligations and the legal redemption procedures available to them, including unfair preferences and other cancelable transactions, and possible reasons for taking action.
Our team can help creditors file a bankruptcy notice and apply to the court for a detention order to appoint a trustee in the possession of the bankrupt. This gives the trustee the opportunity to “recover” the bankrupt assets in favor of the creditors.
If you are in debt, we can help you voluntarily enter into bankruptcy to end all debts, or to counter a bankruptcy notice issued by one of your creditors.