Federal Decree-Law No. (51) of 2023 Promulgating the Financial and Bankruptcy Law

Discover the essential articles of the UAE Bankruptcy Law (51) of 2023. Find out how the Financial Restructuring and Bankruptcy Unit is crucial in its implementation.

Article (12)

Financial Restructuring and Bankruptcy Unit 1. A unit, to be known as the “Financial Restructuring and Bankruptcy Unit”, shall be established in the Ministry, and shall comprise a sufficient number of employees having experience and specialty in financial, legal or economic affairs. 2. The Unit shall have an administrative staff to be appointed or assigned under a resolution of the Minister to help perform its duties. In addition, the Unit may seek the assistance of any persons of experience or knowhow to help it perform its functions.

Article (13)

Financial Restructuring and Bankruptcy Unit’s Functions The Financial Restructuring and Bankruptcy Unit shall perform the following functions:

1. 1. To coordinate with the regulatory authorities and competent Bankruptcy Courts for managing the financial restructuring and bankruptcy proceedings for the companies and corporate bodies supervised by the regulatory authorities;

   2. To give opinion on the applications filed for initiating the proceedings, preventive settlement proposal, plan, composition and debtor’s assets liquidation and distribution plan, in respect of the debts of the companies and corporate bodies supervised by the regulatory authorities, in coordination with the competent regulatory authority;

   3. To approve the roster of experts in the financial restructuring and bankruptcy affairs to perform the functions of Trustees or other duties according to the provisions of this law, and to set the conditions and procedures of listing and registration in the roster of experts;

   4. To create, and submit to the Minister for approval, a reference schedule showing the fees of Trustees and controllers to be appointed according to the provisions of this law, and any costs incurred by them in connection with the preventive settlement, or bankruptcy proceedings;

   5. To create and organize a bankruptcy register in order to record therein the applications filed in relation to financial restructuring and bankruptcy and which are governed by the provisions of this law, and any action taken with regard thereto;

   6. To create and organize a register for the persons against whom court judgments are rendered imposing or revoking any restrictions ordered by the court according to the provisions of this law. The Executive Regulations of this law shall specify the form of the register, the data to be listed therein and the persons having the right to get access thereto and the relevant conditions, and all other relevant provisions;

   7. To supervise the unified e-platform that is created with the aim of building an all-inclusive database for the purposes of this law, through coordination and electronic linkage with the competent federal and local courts, Bankruptcy Department and other relevant entities;

   8. To coordinate with the competent judicial authority for qualifying and training the judges, Trustees and lawyers on the and bankruptcy proceedings performed by the courts, in order to stay up-to-date with the global standards;

   9. To submit periodic reports to the Minister on its activities, achievements and suggestions on the duties entrusted thereto;

   10. To perform any other functions provided for in this law or entrusted to the unit under a resolution of the Cabinet.

Chapter Two Initiation of Proceedings

Article (15) Submission of the Application by the Debtor

1. 1. The debtor may submit to the Bankruptcy Department an application for the initiation of preventive settlement, or bankruptcy proceedings, not later than sixty (60) days from the cessation of payment date or from the date on which it becomes aware of information confirming that it would be unable to pay off its debts when they fall due, unless any of the creditors or regulatory authorities has submitted an application for initiating the proceedings within the aforementioned period. Failure to submit the application within the deadlines stipulated in this clause does not result in the application not being admitted.

   2. If the debtor submits an application to initiate bankruptcy proceedings, the debtor shall be prevented from disposing of its property as of the date of the application’s submission, and any disposal of its property shall be invalidated as of that date. The same shall not apply to unattachable property or the property necessary to support the debtor and its dependents and the legal costs in relation to the application for the initiation of proceedings. The debtor shall manage its assets and business unless the Bankruptcy Court decides, Sua sponte or upon motion of the debtor, any of the creditors, the Trustee, or the unit, if the debtor is supervised by the regulatory authority, to appoint a temporary Trustee to manage the debtor’s assets and business.

   3. The Executive Regulations of this Law shall determine the minimum amount of debt that the debtor has failed to repay or will have been unable to repay when due, referred to in clause (1) of this Article.

Article (16) Submission of the Application by Creditors

1. 1. An ordinary creditor or a group of ordinary creditors may submit an application to initiate or Bankruptcy Proceedings in the event that the debtor defaults on any or more debts owed to them, provided that this debt is unconditional, undisputed and payable. In addition, the value of the debt shall not be less than the amount determined by the Executive Regulations of this Law on the date of submitting the application, provided that the applicant has previously served a notice to the debtor of the necessity to pay off the debt owed by the latter, not later than (30) thirty days from the date of the notice and the debtor has not taken the necessary measures to repay such debt.

   2. The provisions of clause (1) of this Article shall apply to creditors whose debts are secured by a mortgage on the debtor’s property or a transfer of a right over the cash flows generated from the debtor’s property or businesses and to creditors whose debts are secured by a mortgage or lien, provided that the value of the securities guaranteeing their rights on the date of submitting the application is less than the value of the debtor’s debt with respect to the individual creditor’s application or to the collective creditors’ application by a difference not less than the amount determined in the Executive Regulations of this Law for the individual creditor and for the collective creditors.

Chapter Three Appointment of the Trustee and Controller

Article (36)

Appointment of the Trustee If the Bankruptcy Court decides to admit the application to initiate or bankruptcy proceedings, the Trustee nominated by the Unit shall be designated in the same decision, and his fees shall be estimated in accordance with the provisions of this Law.

For illustration;

https://www.adjd.gov.ae/Ar/Pages/Home.aspx

https://abudhabi-lawyers.com/abu-dhabi-criminal-lawyers/

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