The Gazette dated 31st January 2021 announced the existence of an Emergency Financial Crisis. To address the changes during a period of Emergency Financial Crisis, the Corporate Bankruptcy Law was amended in 2020. The Emergency Financial Crisis is defined as “A general situation that affects trade or investment in the country, such as a pandemic, natural or environmental disaster, war, etc.”
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The Cabinet announced the existence of an Emergency Financial Crisis from April 2020 to July 2021 due to COVID 19. During this period:
- Debtors need not file for bankruptcy.
- In instances where the debtor file for bankruptcy, the Court
- can accept the application without continuing with the bankruptcy procedures, if the debtor can prove to the Court that the reason is the pandemic.
- shall not tamper with the debtor’s assets which are necessary for operation.
- Creditors cannot file and place a debtor into bankruptcy.
- The debtor can request forty business days to negotiate a settlement with its creditors after filing for bankruptcy.
- Bankruptcy filed before the Emergency Financial Crisis can be continued and the Court can double the allowed time.
- Directors and managers of a corporate debtor can pay unpaid basic wages and salaries of the company’s employees, without considering the preference issues.
- Debtors can request new financing from the court, both secured and unsecured.
To read more kindly visit: https://www.lexismiddleeast.com/law/UnitedArabEmirates/CabinetDecision_5_2021/
