UAE Implements New Law to Support Financially Insolvent Individuals
Jay Krishnan, Partner
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The UAE Cabinet has approved a new Federal Law to manage insolvency cases, wherein support will be offered to debt-ridden individuals to repay debts within a span of three years. This will also ensure that they are protected from facing criminal prosecution.
Along with protecting debtors from legal prosecution and decriminalizing the fiscal obligations of insolvent persons, the new law will also see to it that they are provided with the opportunity to work, be productive and provide for their families.
The news comes as a savior for people struggling with financial difficulties and it will stop them from taking extreme steps.
The law will come into force in January 2020. Court will appoint one or more experts to help debtors take care of their financial obligations. These experts will work with the debtor and creditors and work out a plan, that will help settle the financial liabilities and fulfill all obligations. This will be done within three years.
Special provisions are included in the law that intends to complete the legal procedures quite fast and to reduce the fees charged for rescheduling and restructuring the debt.
The debtor cannot take any loans during this period until the court decides, upon the request of the expert, the debtor or any of the creditors, that the plan has been successfully implemented.
The law will lead to greater transparency, in terms of civil debt repayment transactions, and will reinforce the position of the country as an ideal destination for investment, where equal rights are given to all the parties. It helps in creating an atmosphere that encourages entrepreneurship and creates favorable conditions for doing business.
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