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May
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Declaring Bankruptcy in the UAE
The UAE Federal Law by Decree No. 9 of 2015 came into effect in December 2016, that governs all bankruptcies on the federal and local level in the UAE and is overseen by the Ministry of Finance.
Declaring bankruptcy in the UAE might seem like an easy task and a heavy breath of relief for those who are no longer able to repay their liabilities in the business industry they’re in. However, knowing what to do in order to formally declare it is important so you won’t be facing serious consequences when you declare bankruptcy in the wrong ways.
Having a bankruptcy lawyer to guide you through the intricacies of this sector will work with you in order to achieve a reasonable and fair outcome for you and for your business.
The courts in the UAE have been taking an extremely cautious approach to handling debtor-led bankruptcy cases, that sometimes lead to either reconstruction of the company or proceed to liquidation if the court considers that restructuring is not possible. Any bankruptcy filing in UAE should be taken seriously as this could have some serious effects on the finances of company shareholders and the company itself.
What Do You Need to File a Bankruptcy?
There are things that you have to do in order to file a bankruptcy in the UAE, some requirements you need to meet in order to avoid having to face legal consequences that could lead to bigger problems before you could even declare liquidation.
The first thing that a business must look for when declaring for bankruptcy is a lawyer that would handle the whole filing processes to prove that the company is in fact insolvent.
Opening an application for declaring bankruptcy requires the debtor or the competent supervisory authority to submit the application with certain documents, along with stating some reasons on why the application is being opened in the first place. A memorandum is one of the documents that needs to be submitted that contains a brief description of the financial and economic situation, asset information, and detailed data of employees. Completing these requirements are necessary whether the application is for restructuring, or to get a legal ruling for bankruptcy and liquidation, along with the justifications for this.
The most important of all these documents is the debt related data that includes the amount of debt and any guarantees available. Followed by the debtor’s cash flow and profit and loss expectations for 12 months following the submission of the application. A statement detailing the names of the creditors, their addresses, amounts due and the guarantees offered to them in return (if there’s any).
It is a must to also submit the certified copy of the debtor’s commercial, industrial or professional license and his commercial register that is issued by the competent authority at the Emirate, along with the detailed statement of all immovable and movable property with approximate value of each of these properties on the date of submission of application, and statement of any guarantees or rights given to others.
And in any case a document cannot be submitted by the debtor or the applicant, the reasons also need to be stated in the application.
It is a possibility that the court does not find the documents submitted sufficient enough, so it may grant the applicant an extended time to provide the additional data or documents needed to support his application.
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