The UAE is in the process of implementing a new bankruptcy law.
The new bankruptcy law is intended to create a more modern, debtor-friendly regime, with particular emphasis on the rescue of a distressed debtor’s existing business or the restructuring of the debtor’s liabilities, rather than formal liquidation or bankruptcy. The new law will be equivalent of Chapter 11 of US bankruptcy laws. Read more about the UAE’s new bankruptcy law.
The onset of the global financial crisis brought into focus the extent to which the UAE’s business and economic landscape had changed. In order to continue to grow and protect existing investment, whilst also continuing to encourage new investment, the UAE Government recognised that various steps would need to be taken. In particular, legislative reform would be required in certain key areas.
Employees’ rights in bankruptcy in the UAE On the face of it, employees’ rights in the UAE seem to be well protected by the bankruptcy laws. Under Article 713(1) of Federal Law No. 18 of 1993 (Commercial Transactions Law), the wages and salaries of workers that have become due 30 days prior to the adjudication of bankruptcy may be paid on a super-priority level (“regardless of any other debt”) by the bankruptcy trustee. However, there is some uncertainty as to whether employees would be paid before secured creditors as the bankruptcy laws remain largely untested in the UAE courts.
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.
If you’re pursuing assets in England relevant to a non-European bankruptcy or insolvency, you can’t rely on a (default) foreign judgment and must instead bring fresh proceedings in the English courts
Notice of assignment
Notice of assignment can be given by either the assignee or assignor under the Consumer Credit Act 1974 (CCA).
This was the High Court's finding in Smith v 1st Credit (Finance) Ltd and another. Smith was notified by her credit card company that her credit card debt had been assigned to 1st Credit. 1st Credit wrote to Smith shortly afterwards confirming the assignment and advising how payment could be made. Smith failed to pay and was made bankrupt by 1st Credit which subsequently repossessed and sold Smith's property.
In a case with truly global implications, the Supreme Court of England and Wales held earlier today that judgments of U.S. Bankruptcy Courts against foreign defendants who had not submitted to the Bankruptcy Court’s jurisdiction were not enforceable in England and Wales in the case of Rubin v. Eurofinance SA.
Factual Background
What happens where a personal injury claimant is made bankrupt part way through the case, or where a bankrupt wishes to bring a claim for personal injury?
- In the current economic climate personal insolvency is common place. According to the official figures, the number of personal insolvencies has risen from about 8,000 per quarter in 2002, to a peak of about 35,000 per quarter at the beginning of 2010. The current trend is a gradual reduction, the second quarter of 2012 seeing 27,390 personal insolvencies. In the last 12 months there have been 115,407 personal insolvencies: 35,456 bankruptcy orders; 30,816 debt relief orders; and 49,135 individual voluntary arrangements.
The Bankruptcy Fees etc (Scotland) Regulations 2012 recently implemented some significant changes to the Accountant in Bankruptcy (AiB)’s fees structure. Key changes include: