UAE Bankruptcy Law to include “emergency” situations
The UAE Cabinet amends the Bankruptcy Law, to support businesses during the times of emergencies, which in return will boost the economic sector of the country.
An amendment was made by the UAE Cabinet to the Bankruptcy Law, which allows companies to overcome credit difficulties during emergencies. The amendment ensures that all the obligations are take care of; there are minimal losses to the debtor, and it also establishes a legal framework protecting the rights of debtors and permitting them access to new financing according to specific rules.”
It was due to outbreak of the pandemic of COVID-19, that the government came up with such an alternative to help the businesses from going bankrupt. Many companies were at the brink of sinking during the pandemic. This amendment provides a provision for the companies to seek help in such situations.
As per the new Bankruptcy Law, the debtor need not file for bankruptcy immediately after facing a crisis. The government has set up options where the debtor can make an application, which will be reviewed by the component court. In case the component court accepts the application for bankruptcy, the debtor still has an option of settling with the creditors within a period of not more than 12 months.
If the bankruptcy application/ request is accepted, the fund which was required to run the business will not be taken away for the specified period of time. This new amendment will help companies, especially the SME’s and entrepreneurs to continue their businesses as raising of funds during such situations is a hideous task.
UAE’s support to its citizens is worth commenting, as they have been helping their people, one way or other to cope up with the drastic situation which has taken over the world by storm. This new amendment to the Bankruptcy Law will keep the people more cautious about emergencies in the future.