The new insolvency law and regulations, which will come into effect on 28 August 2019, introduces a new debtor in possession bankruptcy regime in line with global practises.
Wednesday 12, June 2019
Sheikh Mohammed bin Rashid, Vice President and Ruler of Dubai, has enacted a new insolvency law for companies operating in Dubai International Financial Centre (DIFC), the largest financial centre in the Middle East, Africa and South Asia.
In a statement, the Ruler of Dubai said that the newly enacted Law No. 1 of 2019 compliments the financial centre’s commitment to international best practise, with the insolvency law aiming to balance the needs of all stakeholders in the context of distressed and bankruptcy-related situations in DIFC, facilitating a more efficient and effective bankruptcy restructuring regime.
HE Essa Kazim, the Governor of DIFC, said, “Ensuring that businesses and investors can operate across the region with confidence is crucial to our role in connecting the economies of East and West.”
The new insolvency law also provides for a new administration process where there is evidence of mismanagement or misconduct.
Similarly, the law also enhances the rules governing winding up procedures; and incorporates the UNCITRAL Model Law on cross border insolvency proceedings with certain modifications for application in the centre.
The enactment of the new law follows the collapse of Dubai-based private equity firm Abraaj, which had a DIFC-regulated entity Abraaj Capital.
Once the region’s biggest private equity firm, Abraaj Group claimed to manage almost AED 51.42 billion ($14 billion) of assets at its peak before investors such as the World Bank’s International Finance Corporation and the Bill and Melinda Gates Foundation questioned the use of their money in the company's $1bn Abraaj health fund.