39 C
Dubai
Monday, June 17, 2024
spot_img

Explaining the New UAE Bankruptcy Law: Resolving Claims Amicably Between Debtors and Creditors

Bankruptcy Law The issuance of a new UAE Bankruptcy Law marks a significant overhaul of the restructuring and insolvency legal framework, poised to take effect on May 1, 2024.

Encouraging Amicable Settlements: A Focus on Negotiation and Resolution

One of the pivotal provisions of the law is its emphasis on promoting amicable settlements. Debtors are granted expanded opportunities to seek protective composition through negotiation, offering a strategic focus on resolving financial difficulties.

Specialized Bankruptcy Courts: Dedicated Entities for Judicial Oversight: Bankruptcy Law

To ensure a streamlined and efficient process, dedicated bankruptcy courts will handle bankruptcy cases. Additionally, a specialized unit, the “Financial Reorganisation and Bankruptcy Unit,” will be established to assist in administrative tasks related to these procedures.

Moratorium and Protection for Creditors: Safeguarding Rights During Proceedings

Introducing a moratorium on creditors’ actions from the initiation of judicial measures until the ratification of the restructuring plan, the law prevents separate enforcement proceedings. Flexible claims moratorium periods are defined, allowing extensions, not exceeding six months.

New Financing Conditions: Supporting Operational Needs During Restructuring

Debtors undergoing preventive settlement and restructuring procedures may obtain new financing under specific conditions. The prioritization of new financing over existing debt, along with securing funds, aims to support debtors’ operational needs.

Ceasing Payments Determination: Impact on Past Actions

Unlike the previous law, final judgments will specify the date when debtors cease payments, affecting past actions executed by debtors.

Enforceability of Decisions: Strengthening Judicial Authority

All bankruptcy court decisions and judgments are considered writs of execution, ensuring their enforceability under the new law.

Precautionary Decisions: Proactive Measures Against Ongoing Claims

Bankruptcy courts are granted the authority to issue precautionary decisions, suspending ongoing claims against debtors before issuing final judgments.

Ratification of Restructuring Plans: Safeguarding Creditor Rights

Debtors retain the right to request the ratification of a restructuring plan if creditors refuse to proceed. The bankruptcy court may intervene to ratify the plan, ensuring creditor rights are not diminished.

Personal Liability and Criminal Accountability: Holding Key Stakeholders Accountable

Managers, board members, and liquidators may face personal liability for specified actions, with liability extending two years before the cessation of payment. The law also introduces criminal liability for committing crimes outlined in its provisions.

Application for Preventive Settlement: Proactive Debt Resolution

Debtors with viable businesses can apply for preventive settlement procedures under certain conditions, providing a proactive approach to debt resolution.

Appeal Mechanism: Recourse for Legal Decisions: Bankruptcy Law

Decisions and judgments from the bankruptcy court are subject to appeal within 30 days, offering a crucial recourse mechanism for all parties involved.

This comprehensive overview delves into the transformative nature of the new UAE Bankruptcy Law, outlining its multifaceted impact on debtors, creditors, and the broader business landscape.

Also Read

“Maximize Your Winter Break with These Enjoyable Activities Across the UAE”

Business Operations in Dubai Simplified with Unified License

Related Articles

OpenAI CEO Celebrates Collaboration with Apple, Joyous Partnership

OpenAI CEO Celebrates Collaboration with Apple In a significant announcement, OpenAI CEO, Sam Altman, expressed jubilation over the organization's newfound collaboration with tech giant Apple....

Will Gold price continue to fall after FED verdict?

Will Gold price continue to fall after FED verdict? The metal seen its highest level on May 20, gaining momentum on US rate cut expectations...

Mark Cuban Creates Hundreds of Millionaires, Empowering Leadership

Mark Cuban's influence also extends into the digital economy, where his investments in technology and online platforms have proven particularly transformative.In a remarkable display...

Tesla CEO Elon Musk Faces $7.5 Billion Insider Trading Lawsuit

Tesla CEO Elon Musk, the visionary CEO of Tesla and SpaceX, finds himself embroiled in yet another legal battle, this time facing a staggering...

Elon Musk Tops Forbes Billionaires List, Surpasses Arnault and Bezos

Elon Musk Tops Forbes Billionaires List, Surpasses Arnault and Bezos In a stunning turn of events that reverberated throughout the financial world, Elon Musk, the...

Latest Articles