posted 2 years ago
The laws governing insolvencies of United Arab Emirates-domiciled companies have recently been overhauled, with the new UAE Bankruptcy Law coming into force on 29 December 2016 (the “Bankruptcy Law”). Bankruptcy Law is a major step forward and is influenced by features of several insolvency law regimes in other jurisdictions, as well as international insolvency law trends. In general terms, the Bankruptcy Law streamlines and modernises UAE insolvency law and places a new emphasis on the early restructuring of indebtedness for distressed companies. The previous legislation applied only to “traders”, the Bankruptcy Law is wider in its potential application and captures all companies established under the Commercial Companies Law, most free zone companies (except for those free zone companies incorporated in free zones with their comprehensive insolvency legislation such as the DIFC The «DIFC Insolvency Regulations set out the manner (order) of distributing assets as follows: (i) the expenses of the winding up process, (ii) any payments to preferred creditors and (iii) payments of all other debts which are unsecured or secured. The DIFC Preferential Creditor Regulations specify that employees are to be regarded as preferred creditors».and ADGM « The ADGM has its own Insolvency Regulations (ADGM Insolvency Regulations 2015). The ADGM Insolvency Regulations set out the manner (order) of distributing assets as follows: (i) the expenses of the winding up process, (ii) any preferential debts and (iii) payments of all other debts which are unsecured or secured».), individuals trading for profit and licensed civil companies of a professional nature. However, the Bankruptcy Law does not apply to companies that are wholly or partly state-owned unless they have chosen to opt into the Bankruptcy Law by providing for its application in their company constitutions.