The Federal Decree-Law No. 19 of 2019 on Insolvency, which seeks to regulate insolvency proceedings involving natural persons, has been adopted by the Cabinet of the United Arab Emirates. This legislation was drafted to improve the UAE’s competitiveness by facilitating economic activity, helping those experiencing financial hardship, and shielding those who are bankrupt from legal liability.
The most important parts of the law are:
- The legislation protects those who are having financial difficulties and provides aid to those who anticipate having financial issues in the future that will prevent them from paying off their debts.
- The law allows people to restructure their debts and provides them with the option to get new loans on more advantageous conditions.
- Debtors are shielded from criminal prosecution and their monetary obligations are decriminalized under the law. It gives them a chance to earn a living, contribute to society, and take care of their family.
- In the event of insolvency, the court will appoint one or more experts to assist in the resolution of the debtor’s financial obligations. The expert will collaborate with the debtor and the creditors to create a strategy for paying off the debt in three years.
As of January 1, 2020, the new regulation was in effect. Its adoption helps boost the UAE’s creditworthiness and fosters an atmosphere that encourages entrepreneurship and facilitates doing business in the country.
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