KHALEEJ TIMES, Thursday October 22, 2020 / 5 , Rabi' al-awwal , 1442
UAE amends bankruptcy law to help people in 'emergency situations'
Emirates:
The UAE Cabinet, under the chairmanship of His Highness Sheikh Mohammed
bin Rashid Al Maktoum, Vice President and Prime Minister of UAE and Ruler of
Dubai, has approved amendments to the provisions of the Federal Law by
Decree No. (9) of 2016 on Bankruptcy as part of the government's continuous
efforts to develop the legal and legislative frameworks in the various
sectors, particularly the economic sector, which is a fundamental pillar
within the UAE strategy for the next fifty years.
The amendments stipulate the addition of new provisions to the law with regards
to "emergency situations" that impinge on trade or investment, in order to
enable individuals and businesses to overcome credit challenges in times of
pandemics, natural and environmental disasters, wars, etc.
The amendments are aimed at ensuring fulfilment of obligations, and mitigating
loss given default without prejudice to bankruptcy law, while enabling creditors
to secure their rights.
The new amendments stipulate that the debtor shall be exempted from commencing
procedures to declare bankruptcy. Should the debtor file an application that
would be approved by the competent court, he may reach a settlement with
creditors wherein he may request a grace period, or negotiate a debt settlement
within a period of not more than 12 months.
According to amendments, the competent court, in case of approving the
bankruptcy application, would not take any proceedings involving the debtors'
funds that are needed to keep businesses running during the set period in case
they defaulted on debt for emergency.
The new amendments give room to the possibility of getting new financing as per
specific terms and conditions in order to secure the liquidity needed to recover
businesses and enable them to survive challenges in time of emergencies.
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