The federal law governing insolvency of a natural person stipulated 10 documents submitted by the person to the court, requesting proof of insolvency and settling his financial obligations.

The law excluded two types of funds that are not included in insolvency or liquidation proceedings, namely, the pension or social benefit provided to the debtor, and the necessary debtor funds decided by the court to meet the essential needs of the debtor and his dependents. The decision of the court may be challenged within five working days from the date of its issuance. The court shall decide within five working days, and its decision shall be final.

According to the law that Emirates Today obtained a copy of it, which comes into effect as of January 2020, insolvency means that a person is unable to meet any debts owed to him by individuals or legal entities, and that he faces current or anticipated financial difficulties that make the debtor Unable to settle all his debts.

The provisions of the insolvency law apply to natural persons (individuals) who are debtors who are not subject to the provisions of Decree-Law No. 9 of 2016 on bankruptcy, which applies to merchants.

Stop the suits

According to the law, during insolvency and liquidation proceedings, no proceedings or legal or judicial proceedings against the debtor may be instituted or pursued. The issuance of the decision to open insolvency and liquidation proceedings shall result in the suspension of entitlement to legal or contractual benefits to the debtor, including interest payable. , Or compensation due for late payment, and the suspension of any judicial action against any person who has granted a personal security to the debtor, or who has transferred his money to secure the debtor's obligations, pending a judgment to liquidate the debtor's funds, within the limits of that guarantee.

Criminal proceedings

The law states that if the court decides to commence proceedings to settle financial obligations, or to commence insolvency proceedings and liquidation of funds, it may order on its own initiative or at the request of the debtor, to discontinue any criminal proceedings if they arise from the issuance of checks without balance for checks issued by the debtor before Request for commencement of settlement of financial obligations, or before request for opening insolvency proceedings and liquidation of funds.

The required documents

Article 3 of the law stipulates that the debtor has the right to apply to the court without litigating a person to settle his financial obligations, in accordance with the provisions of this law, if he is in insolvency, provided that the application is accompanied by the required documents.

The law clarifies that if the debtor is unable to provide any of the required documents or data, it shall state the reasons for this in its application. If the court considers that the documents submitted are insufficient to rule on the application, it may grant the debtor a time limit for the submission of any additional data or documents, and the insolvent person must pay the fees, expert fees and expected expenses of the settlement proceedings.

Settlement expires

The law specifies the cases in which the settlement plan expires or nullifies, in which two cases are set for the end of the settlement. First, it states: “The court shall decide on the completion of the financial settlement procedures of the debtor in the following cases: If the court finds that the settlement of the financial obligations of the debtor cannot be reached, If the debtor ceases to pay any of its debts on due dates for more than 40 consecutive working days due to its inability to meet these debts, and if the debtor requests the court to terminate the execution of the plan before the settlement of the financial obligations with the creditors, or the deadline for the execution of the plan has expired without completion. N the completion of the settlement of the financial obligations of the debtor, and if the debtor fails to implement the plan ».

The second case developed would be if all the obligations under the plan were met.

Invalidity of settlement

As for the invalidity of the settlement plan, the law stipulates that the court shall issue a decision to invalidate the approved plan if it finds that the debtor evades, or attempts to evade the fulfillment of his obligations, such as concealing or damaging any part of his property, or providing false statements about his debts, rights or property. Or dispose of any of his rights or property.

The law clarifies that any interested party may file a nullity claim in accordance with the provisions of clause (1) of this article within six months from the date of discovery of the act. In all cases, the case shall not be accepted if it is submitted after two years from the date of the court's decision to ratify the plan.

If the court rules that the plan is null and void, any guarantor who guarantees the execution of the plan shall be discharged, and creditors shall not be obliged to return any amounts received from the debtor against the debts owed to them before the plan is null and void.

Measures against the debtor

The law has dealt with any manipulations that the debtor may undertake, explaining that if the debtor obstructs the insolvency proceedings and liquidates the funds in such a way as to prevent the Secretary from performing his duties in accordance with the provisions of this law, the Secretary may resort to the court to issue an order on a petition. To take any appropriate action against the debtor.

If, after the issuance of the insolvency and liquidation of the debtor, the court determines that any funds of the debtor are not disclosed, it may include such funds in the liquidated funds of the debtor.

The law affirms that `` the court may take the necessary measures against the debtor, if he commits or attempts to commit any of the following acts or acts, including: fleeing out of the state to avoid or postpone the payment of any of his debts, or to avoid, postpone or delay the insolvency proceedings or liquidate his assets. Disposal of any of its funds in order to prevent (the Secretary) from acquiring or delaying the acquisition of it, as well as concealing or destroying any of his funds, documents, documents or other relevant information, which creditors may benefit from, and the transfer of any property in his possession that exceeds its value. At 5000 dirhams without the consent of the (Secretary), or failure to appear before the court after his announcement to attend, or failure to implement its decisions without giving an acceptable excuse ».

10 documents required

1. A memorandum containing a brief description of his financial position, any data relating to his sources of income inside or outside the State, his professional, vocational or professional status, as the case may be, and the liquidity forecast of the debtor, and the sources of such liquidity within the 12 months following the submission of the application.

2. A statement of the names and addresses of creditors for whom the debtor is unable to pay its debts, or is expected to default, the amount of each debt, the dates of maturity, and the guarantees provided to that creditor, if any.

3. A detailed statement of the debtor's movable and immovable property inside and outside the State, and the approximate value of each at the date of application.

4. A statement of any legal or judicial proceedings or actions taken against him.

5. A statement by the debtor that he is facing current or anticipated financial difficulties and that he is unable or not expected to be able to repay all of his debts, whether due at the time of application, or those due in the future.

6. The funds necessary to support the debtor, his family and any dependents.

7. Debtor's proposals for the settlement of its financial obligations.

8. The debtor shall nominate an expert to nominate him to assume the proceedings in accordance with the provisions of this law.

9. A statement of the disclosure of financial transfers outside the country that took place during the last 12 months.

10. Any other documents supporting the application or requested by the Court.

Penalties for insolvency law against the creditor

Any creditor who commits any of the following acts shall be punished by imprisonment and a fine of not less than AED 10,000 and not more than AED 100,000.

- If he makes a claim relating to a fake or sham debt against the debtor.

- If he increases his debts to the debtor illegally.

- If he votes in any meetings on decisions related to the settlement of the financial obligations of the debtor, and he knows that it is legally prohibited from doing so.

If, after the court's decision to proceed with insolvency proceedings and liquidation of funds, the debtor concludes with a special agreement that gives him special privileges, to the detriment of the other creditors, knowing that.

Imprisonment and a fine of up to 60 thousand dirhams

A penalty of imprisonment for a period not exceeding two years and a fine of not less than 20,000 dirhams and not exceeding 60,000 dirhams, or one of these penalties, shall be punished by each of his months of insolvency.

- Spend large sums of money in speculative business that is not required by his usual business, or in the purchase of services, goods or materials for personal or domestic use that are not commensurate with his turbulent financial situation, or he has done gambling, knowing the possibility of damaging his creditors.

- The debts of one of the creditors paid damage to the remainder during the six months preceding the submission of his request to settle his obligations or declare his insolvency.

- Disbursed in his money in bad faith below the market price, or resorted to harmful means, to harm his creditors with a view to delay the publication of insolvency and liquidation of his funds.

- Pay any debts or disbursement of any funds, knowing that they violate the terms of the plan.

Al Ghurair: The law reduces the cost of bad debts

Commenting on the insolvency law, Abdul Aziz Al Ghurair, president of the Federation of UAE Banks, said: `` As the UAE continues to strengthen its position as a regional economic center and a safe haven, laws and regulations will evolve to support the welfare and financial stability of local entrepreneurs and entrepreneurs. ''

Al Ghurair praised the efforts of the Ministry of Finance to take this decisive step to support individuals at this sensitive time and to facilitate doing business in the country.

He stressed that the new law will benefit both the business community and the banking sector, as it allows individuals the opportunity to restructure their financial resources, while helping local lenders to reduce the cost of bad debts.

• If the court finds that any funds of the debtor are not disclosed, it may add them to the liquidated funds.