Restructuring and Bankruptcy Law expected to be ready this year

Dubai: The Restructuring and Bankruptcy Law is likely to be completed by the end of the year, Dr Hadef Bin Jua'an Al Dahheri, UAE Minister of Justice, told media on the sidelines of the Global Policy Conference held by the Dubai Economic Council.

All businesses registered in the UAE will benefit from the new law, the minister said.

Three years ago, if any business owner suffered a very bad situation, he packed his bags and left. However, the new law will allow businesses facing financial challenges to restructure.

Al Daheri said: "The law is in its final stage for approvals and will be released by the end of this year."

The legislation will overhaul how the law deals with businesses and individuals with debt burdens they cannot pay.

It is expected to map out a process for the restructuring of debt owed to creditors, he added.

"Such a law is very important for any economy such as the UAE, the second biggest economy in the Arab world, which is witnessing rapid growth and in need of a good solid legal and legislative infrastructure."

More confidence

Hani Al Hameli, secretary general of the Dubai Economic Council, said: "A bankruptcy law will give security to businesses.

"Going forward it will hopefully instil more confidence in the business community.

"The new law tries to eliminate stigma and encourage parties to sort out their financial problems in a more accessible way."

The bankruptcy law, which has been in the making since 2007, will help attract foreign investment and cut the number of expatriates absconding amid debt obligations, he added.

Pointing to fraud cases which could emerge with the new law, Al Hameli said it is not important to issue the law but to have a proper mechanism with strong rules and regulations to eliminate deception.

One of the obstacles often cited by those who have fled the country is that it is a criminal offence to issue a bad cheque here. However this will not be changed under the new law.

In his keynote speech at the conference, ‘Towards a legal regulation of financial restructuring and bankruptcy for sustainable economic development', Al Daheri said the legislative ministerial committee has finalised and modified a good number of federal laws, such as the company law, bank securities guarantees law, competitiveness law, foreign investment law, small and medium enterprises law and arbitration law.

Although the new law was tailored to certain legislation that fits into the UAE culture and market, it was guided by the bankruptcy law in the US, UK, Singapore and elsewhere.