How the new financial insolvency law will help UAE residents in debt; experts react
It will offer a chance to work with no prosecution, with expert help to settle loans
Abu Dhabi
The UAE Cabinet has approved a federal law to regulate cases of insolvency aimed at enhancing the competitiveness of the UAE by ensuring the ease of doing business, creating favourable conditions for individuals facing financial difficulties and protecting those who are unable to pay their debts from going bankrupt.
The new law is part of the government’s efforts to ensure convenience for citizens and expat residents, and respond to their needs. The law will support individuals who are facing existing or anticipated financial difficulties, rendering them unable to settle their debts. The law will help them reschedule their debts and provide them with the opportunity to be granted new concessional loans.
In addition, the new law will protect the debtors from legal prosecution, decriminalise the financial obligations of insolvent persons, and offer them an opportunity to work, be productive and provide for their families.
The law, which will come into force in January 2020, will assist debtors in settling their financial obligations through one or more experts, to be appointed by the court.
The experts will coordinate with the debtor and creditors to come up with a plan, lasting no longer than three-years, to settle the financial liabilities and fulfil all obligations stipulated in the plan.
During this period, the debtor will be prevented from taking any loans until the court decides, upon the request of the expert, the debtor or any of the creditors, that the implementation of the plan has been accomplished.
The law also contains special provisions that contribute to the swift completion of legal procedures and reduces the fees charged for rescheduling and restructuring the debts, with a view towards finding a fair compromise for both creditors and debtors.
The law not only contributes to enhancing the credit-worthiness of the country in the long run and its future growth prospective, but also enhances the competitiveness and strength of its economy, thus ensuring an enabling environment that encourages entrepreneurship and provides favourable conditions for doing business.
The law, which complements existing financial laws, will contribute to increased transparency, in terms of civil debt repayment transactions, and will ultimately strengthen the UAE’s position as an ideal hub for investment, where the rights of all parties are guaranteed.
Saoud Abdulaziz Khalifa Alsuwaidi, Aircraft Engineer
“A country where it’s people are happy can do wonders. Our forefather Shaikh Zayed bin Sultan Al Nahyan, may his soul rest in peace, is a known role model throughout the world for the sacrifices he’s done not just for the people of UAE but all over the world. So when this new federal law was initiated, it didn’t catch me by surprise because the UAE has always been tolerant and humble to its people which is what makes me proud of my country.”
George Hettiratche, Member of the Sri Lankan Welfare Association
“I think this is a very progressive and positive development which will greatly enhance the confidence of the people and the credit worthiness of the country. People will no longer fear a financial crisis and flee the country. They can approach the courts, seek expert advice and get a breather in resolving the situation. This will definitely bring more transparency in young entrepreneurs trying to make an honest living.”
Anjana Bhatia, Advocate
“The new law is surely a boon as it tries to save citizens and residents swamped with multiple debts and faced with financial difficulties from bankruptcy. That the law decriminalises debts or other financial obligations and gives them an opportunity to restructure payment plans is indeed another act of compassion and humanity from the Government of UAE.”
Bindu Chettur, Advocate
“In my two decades of experience in this country, I have come across tremendous number of cases where people struggle with bad debts.
This law will offer big support when it comes to financial distress. Through this, especially with the experts appointed by the court, there will be an opportunity for the debtors to address their debts without fleeing the country. Many who are unable to renew their visas can look forward to legalising their status after restructuring and repaying their debts and settling the cases.”