The changes will enable individuals and companies to overcome credit challenges in times of epidemics, natural and environmental disasters, wars, etc.
The Council of Ministers headed by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, approved the amendment of the provisions of Federal Decree Law No. 9 of 2016 regarding bankruptcy.
Within the framework of the government's continuous efforts to develop legal and legislative frameworks in various sectors, especially the economic sector, which is a fundamental pillar of the UAE's strategy for the next 50 years.
The amendments provide for adding new provisions to the law regarding "emergency situations" affecting trade or investment, in order to enable individuals and companies to overcome credit challenges in times of epidemics, natural and environmental disasters, wars, etc.
The amendments aim to ensure fulfillment of obligations and mitigate losses in the event of default without prejudice to bankruptcy law, while enabling creditors to secure their rights.
The new amendments exempt the debtor from commencing bankruptcy proceedings. If the debtor submits an application approved by the competent court, he may reach a settlement with the creditors where he may request a grace period, or negotiate a debt settlement within a period not exceeding 12 months.
According to the amendments, the competent court, in the event of approval of the bankruptcy application, will not take any measures related to the debtors' funds necessary for the continuation of business during the specified period in case they fail to pay debts for emergency situations.
The new amendments provide an opportunity to obtain new financing according to specific terms and conditions in order to secure the necessary liquidity to restore the business and enable it to face challenges in times of emergency.