The UAE Cabinet has approved the new law of bankruptcy in September 04, 2016 and has been already signed and approved to continue in 2017. Lately, many companies and retail shops are closed and the owners have left the country with huge number of debtors and cases.
Therefore, the law of bankruptcy drafted which has been implemented in chapter No.5 of commercial transaction law.
The applicant who owns the company inside UAE can submit the request of bankruptcy after 30 days from their non-payment of entire dues in the court. The procedure of reviewing the matter of applicant is decided for each procedure how long the judge and experts will decide on matter anticipated approximately within 90 days. After the award is issued and confirmed the bankruptcy of the company the same judgment will be valid for a duration of 5 years.
The aforesaid law has adopted the law from Japan, Dutch and trusty from English law.
The law only applies for the companies, traders and businessmen who are registered in within UAE including sole establishment company, corporate company, and professional company however, free zone companies; DIFC and Abu Dhabi have their own procedure.
The applicant must submit a request of bankruptcy not later than 366 days of their pending dues.
The law has also considered individuals who cannot pay their debts and loan due to loss of their jobs and impact of the bankruptcy of the company which is call insolvency.
Many of the traders and businessmen raised questions regarding bounced cheques. Please note that the law of bankruptcy will not change the procedure and law of criminal cases with regard to the bounced cheque, however if the company has a case of bankruptcy in the court, we can hold the procedure of the criminal case for bounced cheque for sometime until the court decides the matter accordingly.
Moreover, please note that the foreign branches company who have registered within the UAE can also file a request for bankruptcy, although the mother company is not bankrupt.
After the court decides the bankruptcy of the company, the trusty will be appointed by the court for distributing the assets for the creditors.