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Key Things to Understand About Filing a Bankruptcy Petition in the UAE

28/05/2021

If an organization is announced bankrupt in the UAE, substantial commercial, monetary & legal consequences will follow. It will probably lose all of its money & different resources, while its creditors are probably not going to get back the entirety of its debts. A dealer who applies for bankruptcy is probably not going to be in a position to deal with a business or be in a leading group of any organization for a long time. The bankruptcy procedure is a genuine legitimate cycle, planned by the official and perceived under the law, which is accessible to organizations that can't pay for their creditors or to the creditors of such organizations who don't get installments they are expecting. The bankruptcy law of UAE is observed as an enhancement over the earlier bankruptcy laws to the extent that the bankruptcy Law: 

  • > Permits organizations in monetary trouble the chance to redesign their issues to stay viable.
  • > Or in the lack of the ability to remain viable, takes into account an organized liquidation measure.
  • > Gives help from the most cumbersome impact of criminal punishments that had recently been in power, which was being forced against the chiefs & officials of organizations owing debtors.

The Bankruptcy Law applies to companies fully or partially owned by government employees, companies registered under commercial company’s law of UAE, civil companies, several free zone companies, traders as defined under commercial transactions law of UAE. When your organization is thinking of filing a bankruptcy petition under the new bankruptcy law in the UAE, there are some crucial things to consider before filing the petition, they are:

The UAE Bankruptcy Law Is Untested

The law is untested in court, hence you probably won't get what you really need. The law defines one thing however what works out practically speaking might be changed given that the execution of the law is an uncharted area for the courts.

Expenses Related To Filing a Bankruptcy Petition

Your firm might be bankrupt, however, you need to fork out assets to filing a bankruptcy petition. The key expenses included are i) Court deposit- the petitioner should deposit a sum of AED 20,000 with the court to take care of the court's expenses according to the insolvency procedures. ii) Translation charges - most of your organization's documents are probably going to be in English & every one of them should be converted into Arabic. Be ready to spend in any event around AED 5000 in translation charges corresponding to the supporting archives for your organization's applications. Iii) Legal advisor charges -this is likely going to vary from one case to another contingent upon the intricacy just as the attorneys whom you approach.

Power Of Attorney of Your Organization Manager

Your organization’s manager should give a legalized power of attorney for the legal advisors & may likewise have to address the organization before government specialists. When the manager is out of the country, which in some cases will, in general, be the situation when an organization is in economic difficulty, at that point the organization needs to guarantee that the company manager gives an extensive power of attorney for an individual in the UAE who might have the option to do some duties for the manger.

Resolution of Shareholders

The shareholders of the organization should give an authenticated or a sanctioned resolution supporting the filing of the bankruptcy petition. If the shareholders are situated outside the UAE, guarantee that they likewise delegate their specialists to people in the UAE, if conceivable as the organization will probably be needed to create shareholder resolutions for different activities important to filing the petition.

Supporting Documents

Filing a bankruptcy petition includes examining different supporting documents for your organization's applications. Some of them are:

  • Trade license & constitutional documents of the firm.
  • Short memorandum clarifying the financial circumstances of the organization, its representatives, & subtleties identifying with its resources.
  • A report containing cash flow forecasts, creditors details, movable & immovable properties of the organization.
  • Company’s financial statement for the last monetary year.
  • A credit report on the organization from a skillful position.
  • Nomination of a trustee for dealing with insolvency techniques.

Not having these supporting documents may put your organization in danger of getting its application dismissed. Examining the supporting reports will take you time maybe 2 or 4 weeks, so don't anticipate for the time being ponders.

Take Advice from the Best Bankruptcy Services in Dubai

Before filing your bankruptcy petition, consult with the top Bankruptcy experts in Dubai like ARC Associates to get good upshots. We have the best Bankruptcy lawyers & Legal Advisors for bankruptcy and insolvency in UAE who specialize in this process, with the solitary determination of settling your organization debts & having eliminated any potential criminal liabilities over the implementation of this new UAE bankruptcy law. We can guide you to complete all the legal formalities & procedures to filing a bankruptcy petition in the UAE. So please feel free to contact our team for an initial consultation to get the most suitable procedure for your filing the bankruptcy petition.