UAE Cabinet approves federal law concerning the insolvency of natural persons
DUBAI, 17th November, 2019 (WAM)
The UAE Cabinet has approved a federal law to regulate the cases of insolvency of natural persons. This law aims at enhancing the competitiveness of the UAE by ensuring the ease of doing business, creating favorable conditions for individuals facing financial difficulties and protecting those who are unable to pay their debts from going bankrupt.
The new law comes as part of government efforts to ensure convenience for citizens and residents and respond to their needs.
The law will support individuals who are facing existing or anticipated financial difficulties that make them unable to settle their debts.
The law will help them reschedule their debts and give them the opportunity to take new concessional loans. In addition, the new law will protect the debtors from legal prosecution, decriminalize the financial obligations of the insolvent person and give them an opportunity to work, be productive and provide for their families.
The law, which will enter into force in January 2020, will assist debtors in settling their financial obligations through one or more experts to be appointed by the court. The expert will coordinate with the debtor and creditors to come up with a no longer than three-year plan to settle the financial liabilities and fulfil all the obligations stipulated in the plan.
During this period, the debtor will be prevented from taking any loans until the court decides, upon the request of the expert, the debtor or any of the creditors, that the implementation of the plan has been accomplished.
The law contains also special provisions that contribute to the swift completion of legal procedures and reduce the fees charged for rescheduling and restructuring the debts with a view to finding a fair compromise for both creditors and debtors.
The law not only contributes to enhancing the creditworthiness of the country on the long run and its future growth prospective, but also enhances the competitiveness and strength of its economy, thus, ensuring an enabling environment that facilitates entrepreneurship and provides favorable conditions for doing business.
The law, which complements existing financial laws, will contribute to increased transparency in terms of civil debt repayment transactions, and will ultimately strengthen UAE position as an ideal hub for investment, where the rights of all parties are guaranteed.