Sheikh Khalifa, President of the UAE, yesterday issued the long-awaited new federal bankruptcy law by decree, according to the state news agency Wam.
The new law, which was approved by cabinet in September, will come into effect three months after being published in the official gazette.
The law, which contains elements of bankruptcy protection laws from jurisdictions including France, Germany and the Netherlands, provides, for the first time, a comprehensive legal framework to help distressed companies in the UAE avoid bankruptcy and liquidation.
It contains provisions to safeguard the rights of both creditors and debtors in insolvency situations, including measures that prioritise secured creditor rights and enable companies to restructure without unanimous creditor approval.
The law applies to companies established under the commercial companies law, companies that are partly or fully owned by the federal or the local government, and companies and institutions established in free zones that are not governed by existing bankruptcy provisions.
It does not apply to companies registered in the DIFC and the Abu Dhabi Global Market, or to private individuals.
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