Insolvency in the UAE
The provisions of the Federal Decree-Law No. (19) of 2019 shall apply to Debtors who are not subject to the provisions of Federal Decree-Law No. (9) of 2016 on Bankruptcy.
What is the difference between Insolvency and Bankruptcy?
Insolvency applies for the civilian debts, whereas the debtor cannot pay his civil debts. While Bankruptcy applies for commercial debts, including but not limited to Traders and Companies, whereas the debtor stops paying his commercial debts when due.
Who is considered a Debtor?
A debtor is the person whose debts are more than his assets.
What is the advantages of this Law?
The main advantage of this law is to provide a new legal approach towards unpaid debts. It aims to decriminalize the financial obligations of an insolvent persons and help them continue working and repay their debts.
How can a Debtor request his debts settlement?
The insolvent debtor can submit an application to the Court requesting the settlement of his financial debts. The debtor should provide to the court an assessment of his financial position and a list of his creditors, in addition to other documents including but not limited to, list of moveable and immoveable assets, summary of claims or court proceedings against him and others.
How long does it take the Court to decide on the application?
The Court shall issue its decision on the submitted application within 5 working days as of the application’s submission date. If the application was accepted, the Court shall start the procedures.
However, the court may reject the application, in the following three situations:
- If it was proved to the Court that the debtor has took or abstained from any action in order to conceal or destroy any part of his funds.
- If the debtor provided wrong information about his debts, rights or funds.
- If the debtor ceased payment of any of his debts for a period exceeding fifty (50) consecutive working days due to his incapacity to settle these debts.
Can the debtor practice his rights after the insolvency proceedings completion?
Yes, a debtor can recover the rights he was deprived of as a result of insolvency, 3 years after the completion of the insolvency proceedings and liquidation of assets.
This period can be decreased to:
- 2 years, if the debtor has settled 50% of his due debts.
- 1 year, if the debtor has settled 75% of his due debts.
The debtor can also recover his rights anytime, before the lapse of 3 years, if he settled all his debts.