Bahrain’s new bankruptcy law, introduced on Wednesday, is a significant boost for the Arabian Gulf's smallest economy, as it will help lure foreign investment and support the growing community of small businesses in the kingdom.
This law will bolster Bahrain's "drive for diversification, and in particular nurturing the start-up and SME market and increasing its footprint in the fintech space,” said Rad El Treki, head of corporate structuring, Bahrain, at law firm Al Tamimi & Company.
Bahrain's bankruptcy law is based on Chapter 11 insolvency legislation in the US, which provides companies in financial difficulty with an opportunity to restructure under court supervision, Bahrain Economic Development Board, the country’s inward investment agency, said in a statement.
“It will introduce measures to allow company reorganisation, where the management is allowed to remain in place and continue business operations during the administration of a case, similar to the Chapter 11 process in the US,” said Khalid Al Rumaihi, chief executive of Bahrain EDB.
Governments in the Arabian Gulf have begun implementing modern bankruptcy legislation in the wake of a three-year oil price slump which has crippled some businesses and made bank financing scarcer, particularly for SMEs.
The UAE's bankruptcy law took effect at the end of 2016, while Saudi Arabia enacted its legislation this summer.
One of the intended outcomes of Bahrain's banktruptcy law the promotion of good governance and investor confidence, said Buthaina Amin, director of legal affairs at Bahrain EDB.
"With a forward looking restructuring mechanism, we are looking at the likelihood of a decrease in the possibilities of liquidation," she told The National.
“Ultimately, this should foster greater access to credit, which is vital to all entrepreneurs, start-ups, and SMEs looking at launching and growing their businesses. With positive reforms that promote increased transparency and provide for restructuring options, the economy would expect to get a boost as a result of debtor and investor confidence – further encouraging innovation.”
Bahrain has seen its foreign investment levels increase dramatically over the last year and wants to continue ramping up inward investment by refreshing corporate legislation and strengthening its business environment.
Bahrain EDB reported a record $810 million of foreign direct investment during the first nine months of the year, compared to $733m in the whole of 2017. However, the smallest economy in the GCC remains fiscally weak after it was hit hard by the slowdown in the regional economy since 2014 and external borrowings soared.
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Read more:
Saudi bankruptcy law to aid struggling businesses
Bahrain to receive second economic package from the GCC
Saudi Arabia approves landmark bankruptcy law
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Bahrain signed this week a financial support package from its neighbours the UAE, Saudi Arabia and Kuwait, which is expected to ensure fiscal stability of the country’s financial institutions. In 2011, the GCC agreed a $20 billion aid package for Bahrain and Oman to support their economies over a 10-year period following the global financial crisis.
The country's new bankruptcy law was part of a package of legal reforms announced on Wednesday intended to strengthen the regulatory climate for current and prospective investors in Bahrain, and shore up the economy as a result.
Bahrain is introducing a personal data protection law intended to govern the processing of data for commercial use, a competition law to prevent the formation of monopolies, and new health insurance legislation.
“The reforms demonstrate that Bahrain continues to create a regulatory environment that is in line with international standards and best practices, to remove stigmas and deterrents, and provide more reassurance to investors and companies operating in and looking to invest in the kingdom,” Mr El Treki said.
THE BIO
Favourite place to go to in the UAE: The desert sand dunes, just after some rain
Who inspires you: Anybody with new and smart ideas, challenging questions, an open mind and a positive attitude
Where would you like to retire: Most probably in my home country, Hungary, but with frequent returns to the UAE
Favorite book: A book by Transilvanian author, Albert Wass, entitled ‘Sword and Reap’ (Kard es Kasza) - not really known internationally
Favourite subjects in school: Mathematics and science
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
ESSENTIALS
The flights
Etihad (etihad.com) flies from Abu Dhabi to Mykonos, with a flight change to its partner airline Olympic Air in Athens. Return flights cost from Dh4,105 per person, including taxes.
Where to stay
The modern-art-filled Ambassador hotel (myconianambassador.gr) is 15 minutes outside Mykonos Town on a hillside 500 metres from the Platis Gialos Beach, with a bus into town every 30 minutes (a taxi costs €15 [Dh66]). The Nammos and Scorpios beach clubs are a 10- to 20-minute walk (or water-taxi ride) away. All 70 rooms have a large balcony, many with a Jacuzzi, and of the 15 suites, five have a plunge pool. There’s also a private eight-bedroom villa. Double rooms cost from €240 (Dh1,063) including breakfast, out of season, and from €595 (Dh2,636) in July/August.
Graduated from the American University of Sharjah
She is the eldest of three brothers and two sisters
Has helped solve 15 cases of electric shocks
Enjoys travelling, reading and horse riding
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
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Killing of Qassem Suleimani
Scoreline:
Everton 4
Richarlison 13'), Sigurdsson 28', Digne 56', Walcott 64'
Manchester United 0
Man of the match: Gylfi Sigurdsson (Everton)
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Results
5pm: Maiden (PA) Dh80,000 (Turf) 1,200m, Winner: ES Rubban, Antonio Fresu (jockey), Ibrahim Aseel (trainer)
5.30pm: Handicap (PA) Dh85,000 (T) 1,200m, Winner: Al Mobher, Sczcepan Mazur, Ibrahim Al Hadhrami
6pm: Handicap (PA) Dh80,000 (T) 2,200m, Winner: Jabalini, Tadhg O’Shea, Ibrahim Al Hadhrami
6.30pm: Wathba Stallions Cup (PA) Dh70,000 (T) 2,200m, Winner: AF Abahe, Tadgh O’Shea, Ernst Oertel
7pm: Handicap (PA) Dh85,000 (T) 1,600m, Winner: AF Makerah, Tadhg O’Shea, Ernst Oertel
7.30pm: Maiden (TB) Dh80,000 (T) 1,600m, Winner: Law Of Peace, Tadhg O’Shea, Satish Seemar
'The Lost Daughter'
Director: Maggie Gyllenhaal
Starring: Olivia Colman, Jessie Buckley, Dakota Johnson
Rating: 4/5