The UAE Cabinet has approved amendments to the Bankruptcy Law to protect companies in “emergency situations” such as the ongoing coronavirus pandemic.
As part of the government’s efforts to develop the legal and legislative frameworks across the economy, the amendments stipulate the addition of new provisions to the law with regards to “emergency situations” that impinge on trade or investment.
They aims to enable individuals and businesses to overcome credit challenges in times of pandemics, natural and environmental disasters and wars, according to state news agency WAM.
The amendments are also aimed at ensuring fulfilment of obligations, and mitigating loss given default without prejudice to bankruptcy law, while enabling creditors to secure their rights.
Sheikh Mohammed bin Rashid Al Maktoum, the UAE’s Vice President, Prime Minister and Ruler of Dubai.
The new amendments stipulate that the debtor shall be exempted from commencing procedures to declare bankruptcy. Should the debtor file an application that would be approved by the competent court, he may reach a settlement with creditors wherein he may request a grace period, or negotiate a debt settlement within a period of not more than 12 months, WAM said.
According to the amendments, the competent court would not take any proceedings involving the debtors’ funds that are needed to keep businesses running during the set period in case they defaulted on debt for emergency.
The changes give businesses the possibility of finding new financing in order to secure the liquidity needed to survive challenges in time of emergencies, WAM added.
The UAE Cabinet is chaired by Sheikh Mohammed bin Rashid Al Maktoum, the UAE’s Vice President, Prime Minister and Ruler of Dubai.
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