Dubai bankruptcy ruling: Court cancels fraudulent land transfer worth Dh24m

Dubai: The Dubai Commercial Court has ruled invalid a land transfer made by a real estate development company more than a decade ago, finding that the donation was intended to defraud creditors. The decision allows the court-appointed trustee to auction the property to repay debts of more than Dh24 million.

The case dates back to January 2025, when the court declared the company bankrupt after years of inactivity and failure to renew its commercial licence. With debts owed to multiple real estate firms and individual developers, the court appointed a trustee to inventory the company’s assets.

The inquiry revealed that the company held no assets other than a single plot of land in Dubai. That land had been transferred in 2014 as a gift to an individual, and later sold in 2018 to a third party. The trustee challenged the transfers, arguing they stripped the company of its only remaining asset and left creditors without recourse.

Attorneys for the original recipient argued the claim was time-barred, since the transaction was more than ten years old and recorded with the Dubai Land Department. They also claimed the transferee had personally settled the company’s debts. The court rejected these arguments, ruling that the statute of limitations begins only when creditors become aware of the disputed transaction.

The court concluded that the donation and subsequent transfer were void, given their intent and effect of harming creditors.

“This judgment reflects a clear judicial stance on safeguarding creditor rights and preventing companies from abusing their powers to shield assets,” said legal counsel Dr Alaa Nasr. He added that the ruling relied on statutory provisions empowering trustees to contest harmful transfers, strengthening confidence in Dubai’s investment climate and legal framework.

The trustee will now list the property for public auction, with proceeds directed toward satisfying claims from approved creditors.