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Dubai International Financial Centre (DIFC), the leading international financial hub in the Middle East, Africa and South Asia (MEASA) region, has today proposed a new Insolvency Law regime. DIFC Authority’s Legislative Committee has invited public comment on the new proposed law, which enhances the current Insolvency Law, in order to bring it in line with international best practice. In doing so, the DIFC Authority has developed an Insolvency Law Regime specifically tailored for the DIFC by taking into account Insolvency Law regimes in comparable jurisdictions, specific developments in English Insolvency Law and insolvency considerations in the UAE.
The Proposed Insolvency Law attempts to balance the needs of all stakeholders in distressed situations in the DIFC with the emphasis being on providing efficient and effective insolvency and restructuring tools. Key aspects of the proposal include:
(a) introducing a new debtor in possession rehabilitation procedure (which includes a stay and cram down mechanism) supervised by the court;
(b) introducing a new administration process (including the appointment of an insolvency practitioner) accessible via rehabilitation where there is evidence of mismanagement or misconduct;
(c) enhancing the rules governing voluntary winding up procedures;
(d) enhancing the rules governing compulsory winding up procedures;
(e) including more detailed provisions on wrongful trading; the re-use of company names; and adding an offence in respect of any misconduct taking place during a winding up;
(f) enhancing the provisions relating to the enforcement of financial collateral;
(g) incorporating the UNCITRAL Model Law on cross border insolvency proceedings into the DIFC law (with certain modifications for application in the DIFC); and
(h) a number of miscellaneous enhancements.
The proposed Insolvency Law has been posted for a 30-day public consultation period with the deadline for providing comments ending on 17 October 2018.
The Consultation Paper can be accessed by visiting: www.difc.ae/laws-regulations/consultation-papers
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