The Ministry of Justice on Thursday announced the establishment of a bankruptcy court to help settle financial cases in the Emirates.
With a headquarters at the Abu Dhabi Federal Court of First Instance, it will adjudicate requests and disputes arising from bankruptcy cases.
One or more branches of the court can also be established in any one of the country’s emirates. These courts will have the same jurisdiction over requests and disputes as the headquarters.
The court shall consist of a president and a number of specialist judges appointed by the Federal Judiciary Council.
A bankruptcy department has also been set up, which will receive applications, objections, grievances, register applications, and issue notifications. This department will verify that any settlements, restructuring, or required data publishing related to the concerned cases are fulfilled.
There will be special provisions for bankruptcy experts and consultants within the court’s remit. The experts will help with managing the debtor’s funds and businesses, implementing precautionary measures, expediting procedures, meeting with creditors, and hearing the debtor or their representative on matters related to their debts, funds, or businesses.
The court’s establishment was announced by Abdullah Sultan bin Awad Al Nuaimi, Minister of Justice and Chairman of the Federal Judiciary Council.
It represents a significant step towards the establishment of a legal environment that supports financial stability while ensuring the continuity of economic growth, the Ministry of Justice said.
What are the laws on bankruptcy?
The country’s laws on bankruptcy provide a legal framework to help companies avoid liquidation through different mechanisms, the UAE Government website states.
Bankruptcy cases are governed by Federal Decree-Law No. (51) of 2023 Promulgating the Financial and Bankruptcy Law.
The mechanisms to avoid bankruptcy and liquidation are:
- Consensual out-of-court financial restructuring.
- Composition procedures.
- Financial restructuring.
- The potential to secure new loans under terms set by the law.
- Conversion to declaration of bankruptcy and liquidation of the debtor’s assets.
The law applies to:
- Companies governed by the Commercial Companies Law.
- Any natural person having the capacity of a trader.
- Licensed civil companies carrying out professional activities.
