The United Arab Emirates (UAE) appears to be finally in the process of issuing a long-awaited new federal insolvency law. Described by some as a game-changer, the government announced in July that its Cabinet has approved a draft of the new law replacing the old (and largely unused) insolvency regime. The highly anticipated law is now pending the approval and ratification of the Federal National Council and Supreme Council before it receives final approval by Sheikh Khalifa bin Zayed bin Sultan Al Nahyan, the UAE President.

The duties and obligations of directors in the United Arab Emirates (UAE) are drawn from various legislative sources; there is no consolidated legislative framework dealing with the duties and obligations of directors under UAE Law. Squire Patton Boggs’ Dubai office have published a summary of the principal duties and liabilities of a director in the  UAE, both generally and in the event of insolvency.

On 29 March 2016, Abdul Aziz Al Ghurair, Chairman of the UAE Banks Federation (UBF), announced a new “rescue initiative” in relation to SME debt in the United Arab Emirates, under which UBF member banks might impose a 90-day “standstill” on use of judicial means to enforce the payment of SME debts.

The High Court has delivered the first decision on the Coronavirus Job Retention Scheme (the “Scheme”), in the context of the Carluccio’s administration.

As we have previously discussed (HERE), despite further clarification from HMRC over recent days, there remain some unanswered questions regarding the detailed operation of the Scheme, given that the Scheme’s exact legal framework has not been published.

The landscape relating to winding-up petitions has changed due to the COVID-19 pandemic. Hundreds of petitions have been adjourned already, and the new Temporary Insolvency Practice Direction has now adjourned all hearings due to take place before 21 April across the country. It also sets out new procedures and timings for the listing and re-listing of petitions, with many hearings in London and the regions moving to hearings by video-conference for the foreseeable future.

COVID-19 is placing unprecedented strain on all businesses, and insolvency practitioner (“IP”) practices are no exception. Government-imposed restrictions on activities and movement will have a direct impact on the ability to carry on business as usual. There may be fewer employees available (through illness, self-isolation and furloughing), strain placed on remote working capabilities and a limited ability to carry out site visits to deal with cases as usual. Closure of schools and caring responsibilities may also lead to reduced personnel capacity.

COVID-19 and Government-imposed restrictions are placing an unprecedented strain on everyone and businesses and individuals may be facing extreme financial pressure. COVID-19 is impacting businesses throughout the supply chain in most, if not all, sectors. This may mean that clients and debtors are unable to meet their obligations and there may need to be changes as to how these are dealt with. This note aims to provide some guidance to help Insolvency Practitioners (“IPs”) deal with certain practical issues that may arise in active cases.

Earlier this month, a Wolverhampton-based financial advisor was banned by the Insolvency Service for eight years after his firm provided poor pension investment advice, resulting in clients losing £7 million.

Background

In a move that will be greeted with a small sigh of relief by individuals, businesses and insolvency practitioners affected by the coronavirus pandemic (COVID-19), HM Revenue and Customs (HMRC) has published new guidance on its approach to insolvency procedures.

The guidance covers:

Directors' Duties and Related Matters, in the Context of COVID-19

Updated: 02 April 2020

Scope And Purpose of This Note

This note summarises the duties that directors of companies incorporated in England and Wales are subject to.

This note explains those duties, and matters that directors should consider in relation to those duties, in the context of the developing coronavirus disease 2019 (COVID-19), commonly known as the "coronavirus" or simply, COVID-19, pandemic.