Introduction
When a limited liability company goes into liquidation, its creditors are faced with considerable uncertainty, not least over their rights to securities on loans made to the defaulter. In such cases, a number of questions arise, including the following:
OW Bunker, one of the world’s major bunker suppliers and traders, and one of the largest companies in Denmark in terms of revenue, has filed for in-court restructuring for major parts of its business.
The subsidiaries involved face insolvency following the uncovering a $125m fraud in Singapore and a $150m risk management loss.
The New UAE Netting Law
Netting is a standard mechanism used in banking and financial markets for the settlement and payment of competing rights or interests between counterparties. This occurs through an agreed process of termination and evaluation of such rights or interests and consolidation to one single (or ‘net’) payment from one party to another, minimising the overall credit and settlement risk.
This article is a case study on how the UAE, a country with two cities which are significant international financial and business centres (namely Dubai and Abu Dhabi), functions without effective insolvency laws; and why this state of affairs is likely to continue for some time.
Whilst it is not strictly true that the UAE has no insolvency laws at all, it is fair to say that no one (debtors or creditors) makes use of the existing laws. A new UAE insolvency law has been drafted, but in the writer’s view it will be years before it sees the light.
The UAE Cabinet issued Resolution (“Resolution”) no. 4 of 2018 Forming the Financial Restructuring Committee (“FRC”) pursuant to UAE Federal Law No. 9 of 2016 (“Bankruptcy Law”).
In this article, we will highlight the important developments brought by the Resolution, especially in respect of Financial Restructuring of Financial Institutions and the introduction of bankruptcy searches to the UAE.
In follow-up to our March 2017 Law Update article, ‘UAE Court Dismisses Physical Bunker Supplier Claim Against Ship Owner’, this article provides an overview of the subsequent determination of the UAE Union Supreme Court’s judgment (Appeal 655 for the year of 2016 / Commercial) in relation to the bunkering matter.
The UAE government issued a new bankruptcy law, UAE Federal Decree Law No. 9 of 2016 (“Bankruptcy Law”) which came into force on 29 December 2016.
The introduction of the Bankruptcy Law is regarded as an important step towards bringing more clarity to the UAE’s insolvency regime. The Bankruptcy Law outlined a more modernized approach to company restructuring and insolvency management.
It has been a busy time for legislators in the United Arab Emirates (“UAE”), with the introduction of many new laws and regulations which impact the financial services industry.
This article looks back on recent developments and attempts to predict what else may be enacted during 2017.
Centre for Amicable Settlement of Disputes
The new UAE Bankruptcy Law (Federal Decree Law No. 9 of 2016) came into force as a response to the 2008 global financial crisis. The new law was designed to encourage the development of a “rescue culture”, and replaces Volume 5 of Federal Law No. 18 of 1993 on the Commercial Transactions Law.
The slowdown in the UAE economy has resulted in a corresponding slowdown in loan growth for the UAE banks and some debt delinquencies, especially in the SME market, and that has lead in some cases to a drop in bank profits as a result of increased bad debt provisions. While we understand that contractors who were the first to be affected have largely already made arrangements, that still leaves many bank customers who are feeling the stress of making scheduled loan repayments when their own profitability and cashflows are coming under pressure.