The UAE Cabinet has approved a federal law to regulate cases of insolvency of natural persons, creating favourable conditions for individuals facing financial difficulties and protecting those who are unable to pay their debts from going bankrupt.
The new law is part of the government's efforts to ensure convenience for citizens and residents, and respond to their needs, said a Wam news agency report.
The law will support individuals who are facing existing or anticipated financial difficulties, rendering them unable to settle their debts. The law will help them reschedule their debts and provide them with the opportunity to be granted new concessional loans.
In addition, the new law will protect the debtors from legal prosecution, decriminalise the financial obligations of insolvent persons, and offer them an opportunity to work, be productive and provide for their families, it said.
The law, which will come into force in January 2020, will assist debtors in settling their financial obligations through one or more experts, to be appointed by the court. The experts will coordinate with the debtor and creditors to come up with a plan, lasting no longer than three years, to settle the financial liabilities and fulfil all obligations stipulated in the plan. During this period, the debtor will be prevented from taking any loans until the court decides, upon the request of the expert, the debtor or any of the creditors, that the implementation of the plan has been accomplished.
The law also contains special provisions that contribute to the swift completion of legal procedures and reduces the fees charged for rescheduling and restructuring the debts, with a view to finding a fair compromise for both creditors and debtors.
The law not only contributes to enhancing the credit-worthiness of the country, in the long run, and its future growth prospective, but also enhances the competitiveness and strength of its economy, thus ensuring an enabling environment that encourages entrepreneurship and provides favourable conditions for doing business.
The law, which complements existing financial laws, will contribute to increased transparency, in terms of civil debt repayment transactions, and will ultimately strengthen the UAE's position as an ideal hub for investment, where the rights of all parties are guaranteed, the report said.