Currently in the UAE, laws related to insolvency are unclear.
Companies face harsh penalties in a bankruptcy scenario, and
individuals can face criminal sanctions and penal sentences.
However, a new bankruptcy law drawing from international best
practice is expected to come into force in early 2017, in the wake
of low oil prices since 2015. With the implementation of the new
law, the UAE government seeks to create a robust legal insolvency
framework, within which all businesses can operate and parties can
be sufficiently protected.
Under the proposed new law, a number of options (including
financial restructuring) will be available to insolvent companies
with the aim of identifying ways to prevent bankruptcy. According
to local news reporting, the law will apply to companies
established under the commercial companies law, companies that are
partly or fully owned by the federal or the local government, and
also companies and institutions established in free zones that are
not governed by existing bankruptcy laws. The proposed new law will
not apply to companies in the UAE already governed by bankruptcy
provisions, which include, for example, companies in the Dubai
International Finance Centre (DIFC) and the Abu Dhabi Global Market
(ADGM). These are two free zones which have their own insolvency
It is believed that the law will particularly assist owners of
small and medium sized companies in the UAE, who have recently
faced challenging economic conditions. More generally, it should
also provide comfort to those doing business in the UAE, as well as
prospective investors. The law is expected to be published in the
official gazette in the coming weeks.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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On 10 November 2014 the Privy Council handed down judgment in Singularis Holdings Limited v PricewaterhouseCoopers , which was heard alongside PricewaterhouseCoopers v Saad Investments Company Limited.
After the decision of the Privy Council in April 2014, the long running Fairfield Sentry case continued today with the new judgment of Leon J. concerning the status of the related US Bankruptcy Court proceedings.
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