Dubai court declares Gulf national insolvent over Dh2.56m in unpaid debts

The Dubai Civil Court has declared a Gulf national insolvent after confirming his inability to repay outstanding debts owed to seven creditors, including banks, individuals and housing finance entities, amounting to a total of Dh2.56 million.

The court accepted the insolvency application in form and substance and appointed a specialised trustee to assess the debtor’s financial position.

According to case details, the debtor filed a lawsuit seeking a declaration of insolvency, citing official debt certificates proving that he was no longer able to meet his financial obligations. He told the court that he is currently unemployed and has no source of income other than a monthly allowance of Dh4,000 received as financial assistance from the Zakat Fund, Al Khaleej Arabic daily reported.

The debtor also confirmed that he owns no assets that could be liquidated, whether in whole or in part, to repay the debts.

The court appointed an insolvency trustee to review the debts and prepare a report on the debtor’s financial status. In the report submitted to the court, the trustee confirmed that the debtor had obtained a housing loan of Dh2 million, of which Dh1.487 million remains outstanding to one bank.

The report also detailed additional liabilities, including approximately Dh43,000 owed to one individual, a loan of Dh243,000 owed to another person, and a debt of Dh105,000 arising from a commercial enforcement case.

Further debts included Dh500,000 owed to a citizen under a commercial enforcement file, Dh150,000 established under a general enforcement claim, and Dh30,500 related to a cheque enforcement case. The trustee noted that all these debts date back several years and that the debtor had been unable to repay any amounts to his creditors.

In the reasoning behind its judgment, the court explained that the insolvency law regulates the procedures for reviewing debts and accepting creditor claims. These procedures begin with the trustee publishing the court’s decision to open insolvency proceedings and liquidate the debtor’s assets in two daily newspapers.

The publication includes an invitation for creditors to submit their claims within 20 working days, after which no further claims are accepted. The trustee then conducts a final review of the claims and submits a detailed report on the debtor’s financial position to the court within 10 working days of the deadline. The court subsequently reviews the report and determines which claims are accepted based on the evidence presented.

Legal adviser Dr Alaa Nasr, the debtor’s legal representative, said the insolvency law aims to assist debtors in settling their obligations by appointing an expert to help identify, verify and liquidate debts from the time the application is accepted and proceedings are opened, until a ruling on insolvency is issued where applicable.

He explained that the law grants debtors several protections, including shielding them from the filing or continuation of lawsuits, suspending all judicial enforcement procedures against their assets, and restricting secured creditors from enforcing claims against pledged assets without prior court approval.

He added that the court may also grant the debtor a grace period to reach an amicable settlement with creditors, among other benefits, provided the debtor acts with honesty and full transparency throughout the process.