The Dubai International Financial Centre (DIFC) has introduced a new insolvency law, which will place the financial centre in line with best practices and at the forefront of complicated debt restructurings.
In his capacity as Ruler of Dubai, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minster of the UAE, has enacted a new DIFC Insolvency Law.
The insolvency law is aimed at balancing the needs of all stakeholders in the context of distressed and bankruptcy related situations in DIFC. It has been issued following the collapse of private equity firm Abraaj Group, which had a DIFC-regulated entity Abraaj Capital.
The firm that had been the Middle East and North Africa's biggest buyout fund unravelled after a row with some investors over the use of money in a $1-billion healthcare fund.
"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. We are committed to continuously enhancing our legislative infrastructure in order to give leading global institutions the certainty and access they need to capture the opportunities within the MEASA region, through Dubai," said Essa Kazim, Governor of DIFC.
The new law, coming into effect on August 28, 2019, introduces a new debtor in possession bankruptcy regime in line with best practice globally. The law also provides for a new administration process where there is evidence of mismanagement or misconduct.
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 new law was subject to substantial research and global benchmarking, as well as thorough public consultation.
By Waheed Abbas
Copyright © 2019 Khaleej Times. All Rights Reserved.