Stephenson Harwood’s Middle East team provide top tips on how to quickly recover debt in the UAE.

The strategy we set out in this bulletin is intended to crystallise the debt in the eyes of the national courts of the UAE making recovery of the debt quicker than it otherwise might be.

Issue letters of demand

Covid-19 has brought about much uncertainty for businesses worldwide and it is timely for a special edition of Going Concerns to provide a "survival guide" in the following jurisdictions Singapore, the People's Republic of China ("PRC"), Hong Kong, United Kingdom and the United Arab Emirates ("UAE"). This special edition will also touch on recent legislation and stimulus packages introduced by governments of the above (where applicable) in response to the Covid-19 outbreak, which will impact both creditors and debtors.

Survival guide

Re Joint Provisional Liquidators of Moody Technology Holdings Ltd [2020] HKCFI 416

The Hong Kong Court has explained why there is no inconsistency between: (a) its domestic insolvency law which does not permit the appointment of provisional liquidators purely for the purposes of restructuring the company; and (b) common law recognition of foreign "soft-touch" provisional liquidators.

What is a soft-touch provisional liquidator?

Novel corona virus and the global COVID-19 pandemic have had devastating impacts on financial markets and the economy generally as well as everyday life. All Canadian businesses now face challenges that were unimaginable even a month ago. Canadian corporations that entered 2020 with weak balance sheets and tightening access to capital, however, may find themselves standing at the precipice of difficult decisions.

Introduction

The immediate focus for Britain’s authorities when dealing with the COVID-19 pandemic has been, quite rightly, to secure the best possible health outcome for the greatest number of people.

Subsequently, following a wave of concern regarding the best way of maintaining the financial status-quo for (i) businesses, (ii) employees, and (iii) individuals, the UK government announced an unprecedented series of assistance programmes, designed to counter the impact of previously unknown, and unquantifiable, distress.

Introduction

Clearly there are some major economic challenges ahead.

Many businesses may be able to withstand the challenges ahead but it may very well be that their trading counterparties (whether suppliers, customers or other stakeholders) will not. Whilst these times can represent an opportunity for some, such as potential acquirers (whether of businesses, assets or distressed debt), in most cases, the climate represents a threat to businesses.

The global COVID-19 pandemic, coupled with an ill-timed crude oil price war between Saudi Arabia and Russia, has in a matter of mere weeks materially disrupted the global marketplace. While we are months or years away from understanding the full impact of the coronavirus pandemic on the economy at large, it is increasingly likely that we may be sliding into a recessionary period. We anticipate that businesses will need to restructure in one way or another to deal with immediate liquidity needs, or long-term financial health.

The construction industry is one of many that may be strained as a result of the current COVID-19 global pandemic. And the insolvency of any party in the construction pyramid often impacts many of the other parties in the same structure. Consequently, prudence in the construction business calls for general awareness of key issues at the intersection of construction and insolvency law.

China Lumena New Materials Corp (in provisional liquidation) [2020] HKCFI 338 (decision made on 23 January 2020 and reasons given on 4 March 2020)

This is the first reported scheme of arrangement in Hong Kong seeking to compromise debt governed by PRC law. Under the Gibbs Rule, a foreign composition does not discharge a debt unless it is discharged under the law governing the debt. In this case, the Hong Kong Court considered an exception to the Gibbs Rule and more generally the principles of sanctioning a scheme.

Background

Coronavirus (COVID-19) has sent shock waves through global markets, businesses and supply chains. Boards of directors and senior management of businesses are likely asking themselves some tough questions. For instance:

1. What should we be doing to protect our employees and operations?

2. Can boards be responsible if employees get sick from COVID-19?

3. Do we really understand the risks to our business operations from COVID-19?

4. What happens if our supply chain vendors fail to perform their contracts with us?