The United Arab Emirates (UAE) has become a global financial hub. Every day, a new business is opened with international transactions. Where new companies are opening in Dubai, some companies are going bankrupt, too. Several law firms have clients who appeal in Dubai courts that concern bankruptcy cases.
With time, the bankruptcy laws in the UAE are changing. However, it does not mean that new laws are made in the favour of debtors and they can avoid the payment. But, it allows the creditor to file an application against the debtor for a bankruptcy proceeding.
The Argument in Bankruptcy
Recently, there have been cases of bankruptcy where the creditors found out that the debtors have hidden some of the assets on the balance sheet or transferred those assets to avoid making payments.
However, debtors failed to submit the documents under the UAE Bankruptcy Law. Moreover, it was observed that the debtor was using bankruptcy law in a wrong manner which prevented the creditor from taking strict measures against the debtor. Consequently, the Court of Appeal ensured that no debtor could use the bankruptcy law to avoid liabilities or violate the rights of the creditor.
How Do Courts Manage Bankruptcy Cases in the UAE?
The lawyers in the UAE have to be vigilant. It begins with an application that is filed by the debtor to proceed with bankruptcy.
They will show a financial statement which will prove that they cannot pay back the amount to the creditor. However, the application was accepted by the Court of First Instance and a trustee was appointed to see if the debtor can repay their debt.
Role of Lawyers in Bankruptcy
As per the UAE law, the court will confirm the financial status of the debtor before it can make any decision. The expert will make a feasibility report to see if the debtor can make debt in any way.
However, in some cases, the debtor does not reveal all their assets in the report, which is only found by an experienced lawyer. A well-qualified lawyer can point out to the court that the debtor has filed a brief report that does not show individual assets and sources of income.
Creditor’s Appeal
The lawyers of the creditors can appeal to the Court of Appeal and request to reject the debtor’s application. Any bankruptcy case without complete information has violated the laws for bankruptcy. According to the UAE bankruptcy law, Article 73 is violated if the documents and information submitted by the debtor are inadequate.
However, it allows the debtor to submit the additional documents and information within a period that is decided by the court.
How Can My Lawyer Handle a Bankruptcy Case?
Your lawyer can make an argument in court that the debtor did not submit the detailed information and financial statement, nor has the court asked for a deadline to submit the information. However, such cases violate the rights of the creditors, which also shows that the Debtor did everything in bad faith and concealed assets to evade debts in the UAE.
How Did the Bankruptcy Law Change in the UAE?
Upon the Creditor’s request, the court now accepts the challenges and they can change their decision which was in the favour of the debtor in the first place, especially when Article 73 is violated by the Debtor. In most cases, the court would find out that the Debtor has transferred or hidden their assets to evade the debt.
Significance of the Bankruptcy Law in the UAE
Several cases of bankruptcy have been resolved when the Court has taken the notice of submission of incomplete information submitted by the Debtor. If any assets were hidden from the Court or the Creditor to evade debts, the Debtor has violated different laws of bankruptcy. However, it also shows that the Court has to be more responsible when dealing with bankruptcy issues. If you are looking for a lawyer in the UAE to help you with a bankruptcy case, make sure that they are good at convincing the judge as well as have enough experience to deal with your case smoothly. Most importantly, they shall have a good reputation in the UAE.
Note: Please be informed that the provided information can be outdated, obsoleted so we cannot take the any liability.