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New UAE insolvency law
The UAE issued Insolvency Law No. 19 of 2019 on 29 August 2019. The Law has come into force since 29th day of November 2019.
Here a question arises that What is the difference between the Insolvency Law and Bankruptcy Law?
The Insolvency Law only applies to natural persons and the estate of the deceased. It does not apply to merchants, traders, commercial companies and similar persons which fall under the scope of the Bankruptcy Law No. 9 of 2016.
Both laws primarily focus on assisting distressed persons and entities by offering them settlement options.
Under the Insolvency Law, a debtor facing financial difficulties may apply to the court for assistance and guidance in the settlement of his financial commitments through one or more court-appointed experts through a court-supervised binding settlement plan.
If the court accepts a debtor’s request under this route and appoints an expert, this puts in place an effective moratorium on actions by creditors applying to seize any of the debtor’s assets; unless such assets are the subject of a pledge. This process also creates a moratorium on a creditor applying to the court for an order commencing liquidation proceedings.
Search and composed by: Sheher Bano
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