Dubai: A comprehensive bankruptcy protection law is expected to be announced by the UAE Federal Government ‘within months', which will give adequate legal cover to companies under financial stress, a top Dubai Government official said.
"The government is working on issuing a comprehensive bankruptcy/insolvency law that will protect businesses under financial stress and help them move forward," Hamad Bu Amim, director-general of the Dubai Chamber of Commerce and Industry told Gulf News. "This is in final shape and could come anytime soon."
The news comes a day after the Dubai Government announced a legal framework to deal with Dubai World's debt restructuring by setting up of a court under the Dubai International Financial Centre (DIFC).
Jennifer Bibbings, Head of Corporate for law firm Trowers & Hamlins, said: "Current provisions relating to bankruptcy under the UAE Commercial Code are underdeveloped. We believe the adoption of the insolvency code used in the DIFC and the establishment of the tribunal to be positive and pragmatic."
Essam Al Tamimi, managing partner of Al Tamimi and Co, said: "The new law could be issued in months. The government started work on this before the crisis impacted businesses here and it is in an advanced stage."
The UAE's Commercial Companies Law has some provision for insolvency. "There is a bankruptcy law that is outdated and the UAE now needs a more detailed one to deal with insolvencies in a better way," Al Tamimi said.
Models
He said the UAE government is looking at some of the best models of bankruptcy protection laws — including one devised by the United Nations.
For a long time, many expatriate businessmen had taken an easy route — flee the UAE, leaving debts behind. Many local banks have pending cases against businesses owing them millions.
Bu Amim said the existing law needs to be elaborated. "There are certain provisions for insolvencies in our Companies Laws. However, there is a need for a comprehensive law to cover businesses."
Abdullah lauds unity
The UAE has "always stood together", Foreign Minister Shaikh Abdullah Bin Zayed Al Nahyan said yesterday, commenting on the $10 billion (Dh36.7 billion) financial support provided byAbu Dhabi to Dubai.
The federation has proved those who doubted its unity wrong, he said in an interview in Kuwait City. "Just look back at our history and you would know the UAE has always stood with each other, all the other emirates," the foreign minister said.
