1. What is the objective of a new law on insolvency of a natural person and what is the legislative source of it?
The Natural Persons Insolvency Bill deals with the debtor's insolvency (if a natural person does not qualify as a trader) to pay his debts due to his insolvency and his / her default, known as the insolvency of the natural person. The organization of this case is linked to the Civil Transactions Act, in accordance with a principle called “concessionary view”, a principle of Islamic jurisprudence, whereby the debtor is given reasonable (or time-bound) to carry out its obligation in accordance with the circumstances of that debtor provided that such delay does not cause damage. Particularly plastics.
2. What is the difference between insolvency law and bankruptcy law?
The insolvency law differs from the bankruptcy law, which was promulgated by Decree-Law No. 9 of 2016, especially in terms of the definition of the debtor.The insolvency law of a natural person applies to a natural person who does not engage in economic activity and is not a trader. But at the same time, the primary purpose of both laws is united, as both are found to protect the common interests of both the creditor and the debtor in a fair and balanced manner, and to divide the risks between them in such a way as to remove the debtor from the circle of financial difficulties and enable him to pay the debts accumulated.
3. Is this law of particular importance to make the State unique from the rest of the States in terms of legislation?
The promulgation of this federal insolvency law will underscore the UAE's leading position. Independent legislation rarely addresses the issue of insolvency of a natural person through specialized independent legislation, although important.
The existence of specialized rules governing the insolvency of a natural person is expected to increase transparency on civil debt repayment transactions and increase the general security of financial transactions, thereby enhancing financial stability in the country. The new legislation is expected to accelerate growth and make it easier for individuals to obtain loans. There are clear and easy rules for collecting bad debts and rehabilitating the debtor's financial situation, increasing creditor banks' confidence in retail lending, and encouraging individuals to turn up. On thoughtful borrowing risks.
In addition to all economic objectives, this law achieves another positive aspect, as it ensures the protection of the debtor's dignity as a natural person, and helps create an opportunity for him to regulate his finances and reduce the burden on him.
4. What are the expected repercussions of the federal insolvency law on the financial and economic stability of the State?
The insolvency law will contribute to enhancing the financial and economic stability of the country and provide a safe environment for the provision of personal loans easily and conveniently to the satisfaction of both the creditor and the debtor.The law provides the necessary balance to guarantee the rights of all creditors and debtors, and encourages the increase of cash flows. Comprehensive and sustainable development efforts in the country.
5. What methods has the law created to help the debtor overcome financial difficulties?
The draft law provides two means to address the occurrence of insolvency of individuals, the first way is the possibility of settling financial obligations, and the second is the resort to insolvency and liquidation of funds.
If the debtor is facing current or anticipated financial difficulties that make it unable to settle all of its debts, the debtor can apply to the court for an opportunity to settle its financial obligations in an easy and accessible procedure that provides him with the necessary assistance, as the court hires one or more experts to assist him during those proceedings. A plan to reorganize and settle financial obligations is being prepared. The settlement plan shall be voted on by the creditors in accordance with a specific mechanism. The plan shall be implemented by the debtor directly, assisting and supervising the expert and monitoring the court.
The law also provides another way in the case of insolvency of the debtor and reaches the stage of the need to liquidate his funds to pay off debts, if he has stopped paying any of his debts on maturity for more than (50) consecutive working days as a result of his failure to meet these debts . The creditors of the debtor may also request the liquidation of its funds under special conditions. In the event of liquidation of funds, a trustee shall be appointed to control and facilitate the liquidation of the debtor's funds in accordance with the terms and conditions of the draft law.
6. How does the debtor settle its obligations?
The debtor shall apply to the court for opening the procedures for settling the financial obligations without litigating any person therein to settle his financial obligations if he is in insolvency in accordance with the provisions of the insolvency law.
7. What documents must be provided by the debtor to request a settlement of financial obligations?
The debtor shall attach the following documents when applying for the settlement of financial obligations:
• A memorandum containing a brief description of his financial situation and any data related to his sources of income inside or outside the State, his professional, vocational or professional status, as the case may be, and the liquidity projections of the debtor and the sources of such liquidity within a period of (12) months following the submission of the application.
• A statement of the names and addresses of creditors whose debts have failed or are expected to default, the amount of each debt, the dates of maturity and the guarantees provided to that creditor, if any.
• A detailed statement of the debtor's movable and immovable property inside and outside the country and the approximate value of each at the date of application.
• A statement of any legal or judicial proceedings or actions taken against him.
• 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 pay all of his debts, whether due at the time of application or those due in the future.
• The funds necessary to support the debtor, his family and any dependents.
• Debtor's proposals for the settlement of its financial obligations.
• The debtor shall nominate an expert to nominate him to undertake the proceedings in accordance with the provisions of this law.
• A statement of the disclosure of financial transfers outside the country that took place during the last (12) months.
• Any other documents supporting the application or requested by the Court.
8. What are the actions of the debtor if it is unable to complete the required data?
The debtor shall state the reasons for not completing the documents or data requested in its application. If the court considers that the documents submitted are not sufficient to decide the application, it may grant the debtor a time limit for submitting any additional data or documents.
9. How long does the court decide on the debtor's application?
The court shall decide on the application without notice or pleading within a period not exceeding (5) working days from the date of submitting the application to fulfill its conditions. The Court shall, if it accepts the request, decide to open the procedure for the settlement of financial obligations.
10. What does the Court's decision to open the settlement of financial obligations entail?
The court's decision shall suspend the obligation of the debtor to apply for insolvency and liquidate its funds. Suspension of execution shall continue during the period of the settlement of financial obligations unless the debtor breaches his obligations stipulated in the plan in accordance with the provisions of this law.
11. What are the conditions for the appointment of an expert by the Court?
In the decision to open the settlement of financial obligations, the Court shall appoint one or more experts to assist the debtor in settling its financial obligations. The expert shall not be a creditor of the debtor or be associated with him in any interest or kinship until the fourth degree.
12. When will the Court decide to reject the request for settlement of financial obligations?
The Court shall decide not to complete the procedures for the settlement of financial obligations and to refuse a request for settlement of financial obligations in the following cases:
• If the court determines that the debtor has committed or refrained from taking any action with a view to concealing or damaging any part of its property.
• If the debtor provides false statements about his debts, rights or funds.
• If the debtor is in a state of non-payment of any of its debts on maturity for more than (40) consecutive working days as a result of his inability to meet these debts.
13. What steps does the expert undertake to prepare the financial liability settlement plan?
• The expert shall prepare the plan in cooperation with the debtor, provide creditors with a copy and deposit a copy with the court within (22) working days from the date of the court's decision to instruct the expert to prepare the plan. The court may authorize an extension of the deposit period if the need arises.
The expert shall invite the debtor and creditors to one or more meetings, specifying the time and place of the meeting, to discuss and vote on the plan, and shall be invited to attend the meeting by any means of communication possible.
• The first meeting shall be held within a period not exceeding (10) working days from the date of providing the creditors with a copy of the plan. The debtor and creditor shall attend the meeting in person or on his behalf.
14. What is the proposed duration of the implementation of the Financial Liability Settlement Plan?
The proposed period for the implementation of the plan may not exceed three years from the date of ratification by the court. It may be extended with the approval of the majority of creditors who own two-thirds of the debts that have not been paid according to the plan.
15. Who are not entitled to vote on the plan?
• Husband of the debtor.
• Any person financially supported by the debtor.
Relatives of the debtor up to the second degree.
16. Is it permissible to amend the plan of financial settlement procedures after its implementation?
Yes, the expert may request the court to approve the amendments if he finds it necessary to make amendments to the plan during its implementation that would cause a change in the rights or duties of any party to it. The court may issue a decision approving the amendment in whole or in part or rejecting it.
17. When the financial settlement procedure plan is terminated or invalidated
The Court shall decide on the termination of the financial settlement of the debtor in the following cases:
• If the court finds that the debtor's financial obligations cannot be settled.
• If it is impossible to implement the plan because the debtor ceases to pay any of its debts on due dates for more than (40) consecutive working days as a result of its inability to meet these debts.
• If the debtor requests the court to terminate the execution of the plan before the settlement of financial obligations with creditors.
• If the period specified for the implementation of the plan expires without being able to complete the settlement of the financial obligations of the debtor.
• If the debtor fails to implement the plan.
The court shall issue a decision to nullify the approved plan if it finds that the debtor has evaded or attempted to evade the fulfillment of its obligations, such as concealing or damaging any part of its property, or providing false statements about its debts, rights, property or disposition of any of its rights or property.
18. What is the amount to which the creditor is entitled to apply for insolvency of the debtor and the liquidation of its funds?
(200,000) two hundred thousand dirhams
19. When will the Court appoint a Secretary to handle the insolvency and liquidation of the debtor?
The Court shall appoint a Secretary if it decides to open the procedures of insolvency of the debtor and the liquidation of its funds. The court may appoint the expert appointed in accordance with the provisions of Article (8) of the insolvency law as the insolvency secretary.
20. What are the functions of the Secretary?
The Secretary shall finalize the claims of creditors and prepare a report on the financial position of the debtor and deliver it to the Court within (10) working days from the end of the specified period (20 working days).
21. When will the court decide on the insolvency of the debtor and the liquidation of its assets?
The court shall decide on the insolvency of the debtor and the liquidation of its assets within (15) fifteen days from the date of receiving the report of the Secretary.
22. How long can the Court decide to grant the debtor a term?
Upon the commencement of the liquidation of the debtor's funds, the Court may, on the recommendation of the Secretary and the debtor's request, decide to grant the debtor a term of no more than three months, extendable for a similar period to reach a friendly settlement with his creditors, provided that this does not prejudice the interest of creditors. .
23. Is it possible for any of the creditors to challenge the court's decision to grant the debtor a time limit for an amicable settlement?
Any of the creditors may challenge the court's decision to grant the debtor a time for amicable settlement before the Court of Appeal. The appeal shall not result in the suspension of the proceedings. The decision issued in the appeal shall be considered final.
24. What are the funds excluded from liquidation procedures?
• Pension or social benefit provided to the debtor.
• Debtor funds required by the court to meet the basic needs of the debtor and their dependents.
25. Who is prohibited from buying debtor funds?
The following persons may not purchase the debtor's property except with the consent of the court if it is in the interest of creditors.
• The debtor's husband, or one of his relatives in proportions or affinity until the second degree.
• Any other person who, during the two years preceding the date of the issuance of the decision to open the insolvency proceedings of the debtor and liquidate its assets, was a partner, employee, accountant or agent of the debtor.
26. When are insolvency and liquidation proceedings closed?
After the final distribution of the debtor's funds to creditors, the court shall issue a decision to close all liquidation procedures, including a list of the names of creditors whose debts are accepted, their amount and what has been fulfilled, and instructs the Secretary to publish that decision in two local daily newspapers, one in Arabic and the other in English.
27. What is the result of the judgment declaring the insolvency of the debtor and the liquidation of its assets?
• Preventing the debtor from obtaining a new loan or financing for a period of (3) years from the date of the judgment declaring his insolvency.
• Preventing the debtor from entering into obligations, with or without compensation, except as necessary to satisfy his essential needs or his dependents for a period of three years starting from the date of issuance of the insolvency of the debtor and the liquidation of his property, unless the court authorizes him to do so by order of a petition submitted by the debtor.
• Listing the names of debtors who have been sentenced to judicial insolvency and liquidation of their property in the special register.
28. When is a renowned insolvency debtor reinstated?
The rights deprived of the debtor in accordance with the provisions of this law shall be realized by achieving any of the following:
• Three years have elapsed from the date of expiry of the insolvency and liquidation of the debtor proceedings.
• Expiry of two years from the date of expiry of the procedures to declare the insolvency of the debtor and the liquidation of its funds if it has paid 50% of its debts.
• The expiry of one year from the date of expiry of the procedures to declare the insolvency of the debtor and the liquidation of its funds if it has paid 75% of the debt.
• A notorious debtor shall be deemed to be insolvency, even if the time stipulated in Article (55) of this Law does not expire if he fulfills all his debts accepted by the court during insolvency and liquidation proceedings.
The debtor may be restored to his insolvency, even if the period stipulated in Article (55) of this Law does not expire if he reaches a settlement with all his creditors, and he is obliged to implement it. Or if he proves that the creditors have cleared him of all debts that remained in his possession after the court's decision to declare insolvency and liquidation.
• The debtor may be rehabilitated after his death, upon the request of the heirs. The dates provided for in Article 55 of this Law shall be calculated from the date of death.
Is it permissible to replace the expert or the secretary?
The Court may replace the expert or the Secretary upon the request of the creditor or the debtor if it is proved that its continued appointment may harm the interests of the creditors or the debtor.
30. What are the penal provisions in the insolvency law?
Any creditor who commits any of the following acts shall be liable to imprisonment and a fine of not less than AED 10,000 and not more than AED 100,000 or one of these penalties:
1. If he makes a claim relating to a fictitious or fictitious debt against the debtor.
2. If he increases his debts to the debtor illegally.
3. If, at any meetings, he votes on decisions relating to the settlement of the debtor's financial obligations knowing that he is legally prohibited from doing so.
4. If, after the decision of the court to proceed with insolvency and liquidation of funds, the debtor concludes a special agreement which gives it special advantages to the detriment of the other creditors in the knowledge of that.
A penalty of imprisonment for a period not exceeding two years and a fine of not less than (20,000) twenty thousand dirhams and not exceeding (60,000) sixty thousand dirhams or by either penalty shall be imposed on 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 troubled financial situation, or he has engaged in gambling, knowing that his creditors may be damaged.
2. The debts of one of the creditors have paid damage to the remainder within a period of (6) months prior to the submission of its request to settle its obligations or declare its insolvency.
3 - disposed of his funds in bad faith less than the price in the market or resorted to harmful means, to harm his creditors with a view to delay the publication of insolvency and liquidation of his funds.
4- Pay any indebtedness or dispose of any money knowing that it violates the terms of the plan.