The application will suspend the enforceability of the Debtors’ obligations under Article 68 of the Bankruptcy Law throughout the period, from the date of filing the application up until the issuance of the court order accepting or rejecting the commencement of the Protective Composition Procedure.

Application for Bankruptcy Dubai can be made by:

• Debtor
• The creditor of at least AED 100,000 due and unpaid for 30 consecutive business days
• Regulator
• Public Prosecutor

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:

• Memorandum of Association with information regarding the Debtors’ Assets and detailed statements of Debtors’ employees.
• Certified copy of the commercial, industrial or professional license
• Copy of the accounting books and financial statements relating to Debtors’ business

A report that includes

• The cash flow, profit, and loss projections of the Debtor for the 12 months following the filing of the application
• A statement that contains the name and addresses of the known creditors and the amounts of their respective entitlements of debts.
• A detailed statement of the Debtors’ Assets – movable and immovable, and the approximate value of each as at the date of filing the application, along with the statement of any securities or rights of third parties against them

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:

• If the debtor is already subject to Protective Composition, restructuring, bankruptcy, or liquidation of the Debtors’ Assets in the State.
• If the debtor fails to submit all the required documents with the application for bankruptcy
• If it is established that the debtor is acting in bad faith or application is an abuse of the process
• If the Court finds that Protective Composition Procedure is not appropriate for the debtor on the basis of the information submitted at the time of filing the application for bankruptcy
• If the debtors fail whether to pay the required deposit amount or to provide the required bank guarantee.

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 petitioner will have to deposit an amount of AED 20,000 with the Court to cover the Court’s costs in relation to the bankruptcy proceedings.
• As most of the company documents are in English, they need to be translated into Arabic for the bankruptcy proceedings. The translation fees are also to be paid by the company filing for bankruptcy.
• As bankruptcy rules in Dubai involve court proceedings, the company also needs to spend money to appoint a lawyer and fees are also to be paid. The number of lawyers’ fees will depend on the complexity of the cases as well as the lawyer who is approached by the company to present the bankruptcy proceedings.

The court will either provide the companies with the below options:

The Protective Composition procedure

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.

The restructuring of the debtor

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.

The Declaration of the Debtors’ bankruptcy and carrying out a fair liquidation

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.