Although declaring bankruptcy in UAE will be able to provide relief when a business is no longer able to repay its liabilities, there's still a few consequences that need to be taken into consideration as they may affect you. You need to be aware of the consequences so you're able to decide the best option for bankruptcy for your business.
- You'll need a bankruptcy attorney to manage the process of declaring bankruptcy in UAE - the legal professional will be the one managing your bankruptcy. The expert will not only work with you but with your creditors as well in order to achieve a reasonable and fair outcome for all. With bankruptcy, a business has the obligation in providing details to the bankruptcy lawyer in UAE, including any change to the company's circumstances. This can involve supplying the expert with bank statements, books, and other documents that the legal professionals ask from the business. There are cases wherein the local courts appoint a bankruptcy attorney for a business.
- Bankruptcy doesn't release the business from its liabilities - a business will have to put its assets for sale during company liquidation or undergo formal restructuring to be able to make changes to the business operations and settle debts to creditors.
- Bankruptcy affects the ability of the business in obtaining future credit - when applying for credit, you'll have to inform a provider regarding the bankruptcy. Credit providers also have records of bankruptcy, which they retain for two to five years starting from the date the business filed for bankruptcy.
- The trustee of the business may have to sell assets - with company liquidation, company assets will be sold by the company's trustee or bankruptcy attorney in UAE. The proceeds will be used in paying creditors. Assets of insolvent businesses are often sold at auction following the trustee establishing the fair market value of assets.
Can a business in UAE declare bankruptcy on its own?
There are risks associated with filing bankruptcy in UAE without the guidance and advice of a bankruptcy lawyer.
- A minor mistake can cost the business everything - when filing incorrectly or submitting documents that are incomplete, the local courts can throw out the case. Should this happen, a business won't be allowed in refiling for any kind of bankruptcy again. If it's able to refile, the business may lose protection when creditors take action against it. The incorrect listing of assets can result in the business losing possessions that it seeks to protect. A bankruptcy lawyer in UAE knows exactly how to provide sufficient protection to your assets. A legal professional specializing in insolvency legislation in UAE can also lead the business through the entire process successfully.
- Mistakes can result in criminal changes for perjury or fraud – committing fraud with a bankruptcy case may lead to imprisonment. A business should not hide income or assets from a bankruptcy judge or trustee, even the assets or income that have not been received yet. A business does not know the legislation well enough that it can avoid a serious situation such as this. A vehicle, gift money, deed property, or any other asset may have signed by you to a relative or friend. A bankruptcy lawyer is going to help with the filing of the petition and list the assets of the business truthfully and in a way wherein the company and the owners are protected from any criminal charge.
- The business may end up having to pay a lot more – when communications between a bankruptcy lawyer and creditors of the company occur, a business has to ensure that it does not negatively impact its bankruptcy discharge with its responses. When company creditors file lawsuits or contest the discharge of debt, do you know how to respond? With a bankruptcy lawyer in UAE, you’ll be able to protect your interests, communicate effectively with the parties involved, as well as save money with negotiations with creditors.
You may want to know: UAE Bankruptcy Law for Restructuring Debts
Corporate Bankruptcy Attorney in UAE
In UAE, after you make the decision in filing for bankruptcy, you'll have to decide the correct one to file. Businesses in UAE can file under Chapter 11 bankruptcy or Chapter 7 bankruptcy, depending on their unique circumstances. Businesses can seek relief under Chapters 7 or 11. Being the leading bankruptcy law firm in UAE, our attorneys know which option is best suitable for the circumstances of each business. Our team of legal professionals provides clients with the best possible financial reboot, depending on its specific situation and requirements.
No bankruptcy filing in UAE should be taken lightly. filing for bankruptcy can have some serious effects on the finances of company shareholders and the company itself. We suggest you reach out to our bankruptcy attorneys in UAE today, so our team can provide advice and explanations, most especially on the consequences of bankruptcy and insolvency for businesses. Call us now!