Bankruptcy Law in Dubai
Bankruptcy Law in DubaiUpdated on Thursday 28th September 2017
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The Bankruptcy Law in the UAE applies for local and foreign companies with establishments in the country, including the ones registered in the free zones of Dubai. If a business can no longer perform its activities due to the lack of liquidities or all kinds of assets, it can be declared bankrupt. The legislation in this matter is strict, applies immediately and can be explained by our lawyers in Dubai. You can also receive legal support in company liquidation in Dubai from our team of advisors.
For what companies the Bankruptcy Law in Dubai applies?
The free zone firms except the ones registered in DIFC (Dubai International Financial Centre), sole establishments, companies controlled by the Commercial Companies Law (CCL), civil companies conducting professional businesses and businesses owned by the government, but not under the CCL, are subject to the Bankruptcy Law in the UAE, meaning that the insolvency will respect the rules and the provisions of such law.
When insolvency intervenes for companies in Dubai?
If a businessman declares the bankruptcy for his/her company, a financial restructuring committee will be created, in order to verify if the firm is subject to insolvency. This is where the new Bankruptcy Law in Dubai introduced the alternative balance sheet test where the assets of a company will be controlled to see if they are enough to cover its accountabilities. In this matter, our attorneys in Dubai will provide you with legal support and will offer advice if a financial restructuring might be suitable for your company.
Insolvency with restructuring in Dubai
A restructuring scheme can be granted if the court of law in Dubai considers that the business can be saved, even if the owner is insolvent. The authorities in charge can impose the insolvency of a company in Dubai if a restructuring plan is not approved, due to an inappropriate approach.
When can bankruptcy be declared in Dubai?
According to the Bankruptcy Law in the UAE, a businessman who cannot pay his/her debts is enforced to declare the bankruptcy in 30 days, and if not, the authorities can impose fines and even imprisonment. The new provisions of the Bankruptcy Law in the UAE refer to the insolvency proceedings against a debtor, where a creditor needs to possess debts of at least AED 100,000 and then notify the debtor for reimbursement in 30 days.
For a better understanding of the Bankruptcy Law in the UAE, we invite you to get in touch with our law firm in Dubai.