DIFC Insolvency Law in UAE Amidst Covid 19
Posted: Jun 28, 2020
We all have been witnessing major steps taken by the government of UAE in order to prevent negative impact of coronavirus on our economy. COVID-19 has just made wide-scale interruption to various ventures both locally and internationally.
While endeavors are in progress to stop the spread and effect of COVID-19, the money related and social impact of the infection will be felt for a long time to come. As organizations are currently managing work from home and the new scenarios in which they can work, some business definitely will understanding monetary challenges (be it present moment or longer term).
The major role in the current situation is certainly played by the government by releasing certain strategies and plans to assist organizations to survive in such circumstances and to financially support them to maintain the economy.
Having said that, apart from the government there are other non-governmental authorities (empowered by the government) taking charge in the current situation to sustain the economy like Dubai International Financial Free Zone (DIFC), wherein multiple companies are registered and are facing financial struggles due to COVID-19. It is advised to all shareholders or directors of the companies registered within UAE or in DIFC or any other free zone to seek legal assistance from Top Lawyers in Dubai in case they face financial hardships or to understand various alternatives offered by the government or non-government authorities to assist you in your financial problems.
The present article strictly focuses implementation of the new Insolvency Law of DIFC and its usage in the current scenario for companies registered in DIFC. The recently instituted insolvency law supplements the DIFC responsibility to global best practice and expects to balance all companies needs in trouble and insolvency related concerns. With an intention to increase proficiency will certainly establish a sense of transparency and predictability required by international business to undertake their operations across Middle East. The ongoing bankruptcy law clings to worldwide patterns and best practices in DIFC. Moreover, the huge spotlight on rebuilding and saving organizations, as opposed to selling organizations, puts the enactment at the cutting edge of universal obligation rebuilding development.
In furtherance, DIFC Insolvency Law embraces the UNCITRAL Model Law on Cross-Border Insolvency, the arrangement energizes participation and coordination between multi-jurisdictional indebtedness procedures and lines up with the DIFCs general objective to accomplish acknowledgment as a worldwide business center point. The incorporation should assist with guaranteeing an increasingly organized and unsurprising way to deal with multi-jurisdictional restructurings and bankruptcies for the many cross-border organizations in the DIFC.
Lastly, the new Insolvency law of DIFC introduces a new concept of rehabilitation allowing companies (who are unable to pay off their debt) to reach with an agreement with their creditors can apply for the regime of rehabilitation. In such event the directors of the company can directly approach the courts of DIFC and can present proposal to the creditors for rehabilitation, wherein the creditors can vote if they are satisfied with the companys restructuring policies, which certainly assist the company to keep their business and simultaneously assures the creditors the security of their unpaid debt.
Dr. Hassan Elhais is a legal consultant in Dubai, specializing in the drafting of all statements of claim, memos and consultation on litigation of all manner.