On 17th of September 2019, the UAE Cabinet has approved a federal law to protect the debtors from legal prosecution.
The purpose of this law is to assist individuals who are facing financial difficulties, which makes them unable to settle their debts and financial obligations, by appointing one or more experts on the basis of a court decision. The task of the experts will be to coordinate between the debtor and creditors to come up with a debt restructuring plan, lasting no longer than 3 years.
This law also aims to reduce the fees imposed on the rescheduling and restructuring of debts not to mention to speed the legal procedures to find a fair solution for both creditors and debtors. It will prevent the debtor from taking any loans until the court decides at the request of the expert or the debtor or any of the creditors or after the full implementation of the plan.
Apart from finding a fair compromise for both creditors and debtor, this law contributes to increased transparency, in terms of civil debt repayment transactions, and will ultimately strengthen the UAE’s position as an ideal hub for investment, where the rights of all parties are guaranteed.