Final draft approved by federal cabinet
The UAE Cabinet has approved the final draft of the federal bankruptcy law. The announcement was made by UAE Vice-President, Prime Minister and Ruler of Dubai Sheikh Mohammed bin Rashid al-Maktoum on his official Twitter account.
We have adopted today the final version of the federal bankruptcy law, designed to enhance the investment attractiveness of our economy and facilitate businesses, Sheikh Mohammed said.
UAE Finance Minister Sheikh Hamdan bin Rashid al-Maktoum also issued a statement, saying: "The law contributes in strengthening the financial, economic and legislative system in the UAE, through putting in place a separate and modern law to avoid bankruptcy cases, including financial restructuring, composition procedures, restructuring debts and liquidation funds. Companies and individuals are now able to restructure their debt while avoiding bankruptcy liquidation.
Analysts have previously critised the UAE for its lack of a bankruptcy law, which has led to the criminalisation of defaulting. The new law is expected to encourage business owners who have previously feared the risk of bankruptcy and its legal ramifications.
Earlier this year, Walid Cherif, the senior managing director and head of the local Gulf Credit Partners, told MEED: Mitigating the risk of bankruptcy and ensuring a safe and attractive business environment in the region will nurture and support investments, both from entrepreneurs and from private and institutional lenders, whether they are banks or private debt funds.
Regulating accumulated debts, easing the restructuring of companies and supporting troubled businesses will have a long-term positive impact on the small business sector . It is hoped that with new legislations in place, the region will further strengthen its position as a financial and trading hub, and will reach the next level in terms of economic sustainability and competitiveness.
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