The UAE must pass a bankruptcy law to help mitigate future financial difficulties of the type being experienced by some of the region’s largest companies, a Dubai Chamber of Commerce official said today.
In an interview in Sharm El Sheikh, Egypt, Hisham Al Shirawi, vice chairman of the chamber, said: “Proper due diligence must be conducted to know what is the health of the companies and their suppliers and what kind of difficulties the companies are going through."
He added: “Once we have all of those factors addressed properly, then we can have a proper bankruptcy law.”
The law would involve stricter criteria than current US legislation, he said. Passage of the new law will probably coincide with a move to raise foreign ownership limits from the current 49 percent, he said.
Dubai World, one of the emirate’s three main state owned holding companies, and its property unit Nakheel are seeking to renegotiate borrowings after the global credit crisis battered Dubai’s real estate market and left the emirate’s companies unable to raise new debt.
Dubai World asked its almost 100 creditors on March 25 to roll over debt into two new loans with five and eight year maturities.
Dubai’s government announced the new bankruptcy “reorganization law” in December as part of the package to rescue Dubai World that included a $10 billion bailout from Abu Dhabi.
The UAE won’t allow 100 percent foreign ownership of companies under a law likely to pass this year, Abu Dhabi Economic Department’s Undersecretary Mohamed Omar Abdullah said in March. (Reuters)