KHALEEJ TIMES, Wednesday, Jun 12, 2019 | Shawwal 9, 1440
Dubai unveils new insolvency law
The Dubai International Financial Centre (DIFC) has introduced a new insolvency
law, which will place the financial centre in line with best practices and at
the forefront of complicated debt restructurings.
In his capacity as Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al
Maktoum, Vice-President and Prime Minster of the UAE, has enacted a new DIFC
The insolvency law is aimed at balancing the needs of all stakeholders in the
context of distressed and bankruptcy related situations in DIFC. It has been
issued following the collapse of private equity firm Abraaj Group, which had a
DIFC-regulated entity Abraaj Capital.
The firm that had been the Middle East and North Africa's biggest buyout fund
unravelled after a row with some investors over the use of money in a $1-billion
"Ensuring that businesses and investors can operate across the region with
confidence is crucial to our role in connecting the economies of East and West.
We are committed to continuously enhancing our legislative infrastructure in
order to give leading global institutions the certainty and access they need to
capture the opportunities within the MEASA region, through Dubai," said Essa
Kazim, Governor of DIFC.
The new law, coming into effect on August 28, 2019, introduces a new debtor in
possession bankruptcy regime in line with best practice globally. The law also
provides for a new administration process where there is evidence of
mismanagement or misconduct.
The law also enhances the rules governing winding up procedures; and
incorporates the UNCITRAL Model Law on cross border insolvency proceedings with
certain modifications for application in the Centre.
The new law was subject to substantial research and global benchmarking, as well
as thorough public consultation.