The Debt Panel: 'The pandemic financially affected my business and I have bounced Dh400,000 worth of cheques'

The Dubai resident is at home in India and is worried about what will happen when he returns to the UAE

Steven Castelluccia / The National

I established a business related to the events industry in the UAE in 2018 and invested Dh1.4 million of my life savings accumulated from 15 years of working in the country.

However, the business began to experience cash flow issues after the Covid-19 pandemic struck because of event cancellations and movement restrictions to control the spread of the virus.

I struggled to secure payments from clients and had to issue cheques worth Dh400,000 to my suppliers and vendors. I also had about Dh50,000 worth of credit card debt in the UAE.

I flew to my home country on a repatriation flight last year. Subsequently, a few of my cheques issued to suppliers bounced. I want to return to the UAE but am afraid I might be detained at the airport by immigration authorities. What can I do to fix the situation? GK, India

Debt panellist 1: Philip King, head of retail banking at Abu Dhabi Islamic Bank

The Covid-19 pandemic has severely affected many businesses and people in the UAE and globally, leaving them in difficult situations and with unexpected financial repercussions.

For those with outstanding debts, leaving the UAE while owing money can be a daunting prospect. However, there is a lot being done to help businesses and people to overcome these circumstances as best as possible.

Usually, leaving the UAE without fulfilling your financial obligations should not be a problem, granted that your bank is aware of your situation. There is no requirement for the borrower to be resident in the UAE while their loans are not yet fully paid. However, defaulting on your loans after leaving the country is a more serious affair compared with defaulting while still in the country, and can lead to legal repercussions.

Given that your cheques have bounced and your bank repayments are overdue, there may be criminal or legal cases against you, resulting in a travel ban and arrest warrant.

Once the criminal case is disposed of and your travel ban and arrest warrant are lifted, you can safely return to the UAE. To recover the outstanding debt, the bank may also file a civil case against you.

As a start-up founder who has been operating through the pandemic, I understand your struggle and the financial effect the pandemic is having on cash flow and, in turn, maintaining payments

There is no arrest or travel ban in a civil case. However, once the judgment is pronounced, there will be a travel ban. To overcome this situation, you may need to appoint a legal representative to represent you to understand the situation fully.

Your failure to keep the bank in the loop before leaving the country may work against you, especially now that you have Dh400,000 worth of bounced cheques and outstanding credit card debt.

At this point, it is crucial to contact your bank immediately to explain your situation, understand the status of your case and whether any legal action has been taken regarding your outstanding credit card debt. Make it clear that you aim to clear your debt in full. If the suppliers filed criminal cases against you for the bounced cheques, then you will need to agree on settlements with them as well.

During these difficult times, banks are being encouraged to be lenient and understanding of their customers’ situations. The primary objective of banks is to provide a strategic repayment plan to enable their customers to become debt free.

Work towards coming up with a repayment plan that you can service even while residing outside the UAE.

However, if you are having trouble negotiating with the bank from overseas, you could look into hiring a legal representative who can negotiate with the bank on your behalf.

A legal expert will not only reach out to your bank to negotiate a restructured repayment plan, but they can also look into how the UAE’s new Insolvency Law can help you out.

Nathan McFarlane, founder of AskHelpWith.com

This is a horrible situation to find yourself in as the economy relies on entrepreneurs such as yourself to stimulate it. Unfortunately, the downside to having your own business often means that your personal financial circumstances take a hit when the company’s revenue suffers.

As a start-up founder who has been operating through the pandemic, I understand your struggle and the financial effect the pandemic is having on cash flow and, in turn, maintaining payments.

The main thing to remember is not to fear the situation; there are structures and procedures to work with and banks are not in the business of sending people to jail.

The important thing to do is to regularly communicate with the lenders you owe money, whether it be a personal debt or company debt.

The reality is that banks know the situation business owners are in and want to recoup funds amicably when possible.

Speak to the banks or check the Dubai Police website to find out if they have filed a case for bounced cheques (via criminal status of financial cases).

If they have, you will probably have to pay a fine to clear the case.

Debt panellist 3: Felicity Glover, personal finance editor at The National

This is a very difficult and stressful situation for you to be in, especially as you are not in the UAE to communicate directly with the banks and your clients.

Unfortunately, many entrepreneurs and salaried employees have been financially affected by the Covid-19 pandemic.

However, banks in the UAE are helping people in similar situations under the UAE Central Bank’s Targeted Economic Support Scheme, or Tess, which has been extended until the end of 2022.

The first step is to establish if a police or civil case has been lodged against you for the bounced cheques. As my fellow columnists have advised, you can check this on the Dubai Police website.

Once you have established this, contact the banks you owe immediately and ask to speak to the most senior person available to explain your situation and assure them that you intend to pay your debt and cover the cheques as soon you are back on your feet and your business is up and running again.

It is possible you may be eligible to apply for assistance under Tess, particularly for your credit card debt, so it is also worth asking your banks about your options, including payment holidays or switching the payments over to a loan, which will lower the interest rate and monthly instalments.

It may also be worth hiring a lawyer to help you negotiate with the banks and your clients regarding the bounced cheques. Assuming a case has been filed against you, perhaps they will be willing to drop it if you explain to them that you need to come back to the UAE and ensure that your business is up and running again, which will enable you to pay them.

Finally, do you have any assets that you could sell? This could be a property or a financial investment in stocks or exchange-traded funds, for instance. While I do understand you might be apprehensive about liquidating an asset, sometimes this is the best way forward and allows you to financially regroup and restart your business. I wish you the best for the future.