UAE Declares An Emergency Financial Crises Period
By Eric Teo – Head of International Practice & Special Projects at United Advocates
Many stakeholders in the UAE construction industry are concerned with the latest news of Arabtec officially filing for bankruptcy. Some might be fretting over their long list of debtors and are anxious to take action. However, they will need to be aware that the UAE is currently in the “Emergency Financial Crises” (EFC) period insofar as the UAE companies’ bankruptcy law is concerned.
To recap, the law was amended in October last year to introduce the concept of EFC. Furthermore, on 31 January 2021, Cabinet Resolution No.5 of 2021 was published, confirming the period from 1 April 2020 to 31 July 2021 to be an EFC period under the law. Hence, several provisions under the law will not be enforced during this period. For example, a debtor would not be required to file for bankruptcy even though it may be in a state of insolvency as per the law; and a creditor would not be able to apply bankruptcy proceedings against its debtor.
Only time will tell if this 16 months period is sufficient to allow distressed companies to restructure or find help. With the rapid progress of the UAE vaccination program, we are all hopeful.
If you require future guidance on the matter, please do not hesitate to contact us at United Advocates.