Report: UAE to introduce new bankruptcy laws

Abu Dhabi - The United Arab Emirates will introduce a bankruptcy law, likely within the coming months, that will enable companies under financial stress and insolvency to rework their debt, according to a newspaper report Wednesday. "The government is working on issuing a comprehensive bankruptcy-insolvency law that will protect businesses under financial stress and help them move forward," Hamad Bu Amim, director-general of the Dubai Chamber of Commerce and Industry, was quoted as saying by Gulf News.

He said the law was being drafted and "could come anytime soon."

For foreign business operating in the UAE, the new laws would introduce an alternative to simply fleeing the country and leaving mountains of debt behind when business turns sour.

On Monday, Dubai introduced new rules to allow for companies like the state-owned Dubai World to file for bankruptcy. The laws are set to allow businesses to rework debt through restructuring mechanisms locally, with tribunals to which creditors can bring claims.

This would also reduce the reliance of the companies on sovereign aid.

This week, Abu Dhabi extended a 10 billion dollar bailout to Dubai, on top of previous loans, to help shore up Dubai World, which on November 25 said it would need a freeze on repaying its debt obligations.

The first money from the oil-rich emirate appears to have gone directly to repaying some 4.1 billion dollars owed by Nakheel, the development wing of Dubai World, which had an Islamic bond (sukuk) which came due on Monday.

Source: Earth Times.
Link: http://www.earthtimes.org/articles/show/299565,report-uae-to-introduce-new-bankruptcy-laws.html.