Business leaders, experts welcome new law

Sunday, Sep 04, 2016

Dubai: A cross section of business leaders, bankers and financial experts said the introduction of bankruptcy law in UAE will help companies to seek a professional way out in case needed, and boost their confidence in the system by improving ease of doing business and encouraging more firms to establish business in the UAE.

Experts said the aim of the new law is to allow the debtor to retain control of his business and get court protection for a period of time while solutions are sought. The new law also draws heavily from provisions for corporate bankruptcy modelled on Chapter 11 proceedings in the US and similar laws in other parts of the world.

Suvo Sarkar, Senior EVP & Group Head, Retail Banking Wealth Management.

“This much-awaited legislation will provide further impetus for entrepreneurs and SME owners to think innovatively and take calculated risks while growing their businesses, as well as encourage lenders to be more supportive of newer ventures,” said Shailesh Dash Entrepreneur and Founder, Al Masah Capital

“This is a very welcome news for both the financial sector as well as the business sector particularly for the SME segment. It will help entrepreneurs and the banking sector in a significant way in both planning and managing their businesses better. Should help the SME sector in particular in the current business environment.”

De-criminalisation of defaulting on debt

Laurent van Helden, General Manager, Middle East of Frames, an oil and gas services company.

“I see this as a great improvement in the local business climate. The main thing that I think will be an improvement is the decriminalisation of defaulting on debt. This will mean that the management and or owner of the company will not be put in prison when he gets into trouble as it then becomes impossible for the management or the company to get out of the situation. I think this will result in the lenders being forced to do their due diligence when dealing with small to medium enterprises but it will also greatly help in struggling firms coming to an agreement with their lenders to find solutions to the problems instead of taking it to court and prison.”

Frank Wouters, Chairman of BeNeLux (Belgium, Netherlands, Luxembourg) Business Council in Abu Dhabi.

“That’s great news and long overdue. As the chairman of a business council that represents many SME’s in the UAE I would like to commend the UAE government on this important step. Decriminalising companies and persons that are in financial distress makes a lot of sense, since it enables finding a solution for both debtors and creditors in a constructive way. In most cases no solution can be found if one of the parties is in jail, negatively impacting the situation for the creditor also. Many jurisdictions have mechanisms in place to salvage a dire situation, such as the infamous chapter 11 in the US, and that has proven to be very effective.

Babu Das Augustine, Banking Editor; Fareed Rahman, Senior Reporter; Sarah Diaa, Staff Reporter