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Monday, 19 December 2016

Fitch: Courts Will Be Key to Implementing New UAE Bankruptcy Law | Reuters

Fitch: Courts Will Be Key to Implementing New UAE Bankruptcy Law | Reuters:
"(The following statement was released by the rating agency) DUBAI/LONDON, December 19 (Fitch) The ability of the UAE courts to interpret the federation's new bankruptcy law and handle bankruptcy proceedings will be key to its effective implementation, Fitch Ratings says. The law is due to come into effect at the end of this month. It aims to create a clear and predictable framework for court-based bankruptcy proceedings as an alternative to liquidation. We think the new law could benefit banks and corporates, by allowing for going-concern restructuring (see "Fitch: Bankruptcy Law May Benefit UAE Bank SME Lending" ). Existing UAE law defines how a court can declare a company bankrupt, appoint a trustee, realise assets and settle debts. But there has been no legal provision for the rehabilitation of distressed companies through creditor agreement, and the regime is largely untested. This is because so far debt restructurings have been informal, out-of-court arrangements, partly due to creditor perceptions that local courts lack judicial expertise and that court proceedings will be lengthy and expensive. When economically significant entities have experienced financial difficulties, the government has intervened, for example by introducing bespoke legislation when Dubai World rescheduled debt repayments in 2009."

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