The UAE Bankruptcy law has recently seen a change. In the past insolvencies required companies in the UAE to undergo consensual restructuring of a debtor’s liabilities. In addition, largely untested legislations previously pushed companies and their partners towards restrained insolvencies owing to limiting procedures. The new bankruptcy law is a game-changer, bringing with its major changes which will positively impact businesses.
Bankruptcy Law- an overview
The new bankruptcy law comes as a sigh of relief for a large number of companies. The legislation under the new law will be established for all commercial companies except for those which were registered under the legislation of free zones. Companies not solely owned by the state, are exempt from the bankruptcy law and hence will not gain with from the new law.
The new law has piqued the interest of budding entrepreneurs who now envision sustaining their businesses for the foreseeable future.
Bankruptcy law for liquidation in UAE
The latest law has eased the woes of businesses about bankruptcy and liquidation. This new law will act as a catalyst for the companies and will help them promote themselves. The new law aims to support businesses that are under pressure or distress, by focusing on restructuring company debt and allowing them to deal with the failure of a business with ease. For companies to benefit from the new changes to the law, companies will need to adapt as per the legislative changes, which in turn will better their services.
Limitation of bankruptcy law
Secured creditors are not bound under the proceedings of this law, which may prove to be a hurdle in the effectiveness of this new modern bankruptcy law. It may limit the number of debtors seeking protection in large financial transactions under the bankruptcy law.
Failing to File Bankruptcy in the UAE
Individuals failing to file for bankruptcy or failure to file within the allowed time frame, will not be considered a criminal act. This is to reduce additional pressures on companies facing bankruptcy. The law states that it is the responsibility of the shareholders of a company to decide the commencement of a preventive composition or a bankruptcy process.
Managers or directors facing financial issues can now work towards taking appropriate steps towards saving their companies without fearing criminal sanctions.
If your company can no longer support itself or is in debt, you can file for bankruptcy or choose to liquidate the company. Liquidators in Dubai are known to process such transactions professionally with minimal distress to owners, directors or managers.
HHS Lawyer is a leading international firm in UAE well known to undertake matters like liquidation, bankruptcy or more. With a trustworthy track record, HHS Lawyers can assist with the deregistration process in accordance with the UAE law.