Bankruptcy is a legal proceeding involving a person or business that is unable to repay its outstanding debts. Bankruptcy is a legal proceeding carried out to allow individuals or businesses freedom from their debts, while simultaneously providing creditors an opportunity for repayment. Bankruptcy can allow you a fresh start, but it will stay on your credit reports for a number of years and make it difficult to borrow in the future.
Bankruptcy Law in the UAE allows the companies in financial difficulty the opportunity to reorganize their affairs in order to remain viable; or in the absence of the ability to remain viable, allows for an orderly liquidation process; and provides relief from the most onerous effect of criminal penalties that had previously been in force, that were being imposed against the directors and officers of companies in debt.
Application for Bankruptcy Dubai can be made by:
While the company decides to file for bankruptcy services in the UAE, the application is for Protective Composition and the below documents need to be submitted with the application:
A report that includes
The Court shall decide on the application for Protective Composition, without the need for any opponent to appear, within a period not exceeding five Business Days from either the date the application is filed, provided it conforms to the requirements of this Law, or, from the date on which the expert submits the report, as the case may be.
The Court shall dismiss the application for bankruptcy in the following cases:
Though the company is going bankrupt, there are various costs that they have to incur from filing the bankruptcy application to the final Court verdict. Below are the few costs that will be incurred:
The court will either provide the companies with the below options:
It is applied when the debtor files for bankruptcy in court. It is mostly suitable for businesses and companies that are facing financial stress but not on the verge of becoming insolvent. This needs to be implemented within three years of court approval.
This is implemented by the court when the business or the company is insolvent but there is a possibility that the business could be rescued. Restructuring is given a longer period of time. The restructuring plan needs to be developed by the debtor along with the trustee within 3 months from the date of the decision.
Liquidation of a business or a company is the last resort that is ordered by the Court when the business is completely insolvent and there is no chance or option left to run or manage the business. There are strict guidelines and deadlines that need to be followed by businesses going into liquidation. If the company’s assets are insufficient to settle at least 20% of the debts, the court may order all or any of the members of the board or management to pay all or any of the company’s debts.
We at AKAI Business Solutions, Bankruptcy experts in Dubai specialize in this process, with the sole purpose of settling your companies debts and having removed any potential criminal liabilities through the implementation of this new law.
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