DUBAI: His Highness Shaikh Mohammad Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, has issued a new insolvency law for companies operating out of the Dubai International Financial Centre (DIFC), which will be effective from August 28, the Dubai Media Office said on Tuesday.
The new insolvency law introduces a new “debtor in possession” bankruptcy regime in line with best global practices, placing at the forefront of complicated debt restructurings.
This law is expected to smoothen the bankruptcy proceedings for any such companies, making it frictionless for the stakeholders involved.
“The key feature is the introduction of a ‘new debtor in possession bankruptcy regime’ for debtors that have filed for bankruptcy but still hold assets,” Vrajesh Bhandari, senior portfolio manager at Al Mal Capital told Gulf News. The leftover assets would critical for investors or debtors after a company goes into liquidation.
“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,” Essa Kazim, Governor of DIFC, said in a statement.
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.