Why And When Should You Hire A Bankruptcy Lawyer In The UAE?
Bankruptcy is a word that you never want to associate yourself with.This is an extremely difficult situation to pull yourself out of. People spend years and years to get rid of the label of bankruptcy away from them. It is not only a strike against your reputation but it takes a severe toll on your confidence level and overall mental health.Therefore, to help you stand on your ground as quickly as possible, you need a bankruptcy lawyer by your side. He or she will guide you each step of the way to resolve, restore, and rebound from the existing crisis that you are facing.
A closer look into the bankruptcy law of the UAE will help you determine when you need to hire a bankruptcy lawyer. As we present before you the different layers of the current law scenario, you will be able to get a clear picture as to why you need to hire one.
The New UAE Bankruptcy Law – An Overview
The new bankruptcy law that came into effect in the year 2016 is a major improvement from the previous insolvency laws that were outlined by the commercial transactions law.
The new law enables companies that are suffering from a financial crisis the opportunity to re-establish their affairs from scratch so that they stay viable. If the said company is not in a position to remain viable in the market, the new bankruptcy law provides it with the opportunity to opt for an organized liquidation process.
In addition, the new law also gives relief from the strict effects of criminal penalties that were previously in force. This is a welcome change for the directors and officers of the companies in question.
Who Does the New UAE Bankruptcy Law Apply to?
Now that you have a fair idea of the new UAE bankruptcy law, you need to figure out whether it applies to you and your business or not. If any of the following statements ring true to you, then this new law will be applied to you:
Providing an Agreement between the Debtors and Creditors
Bankruptcy lawyers are specifically trained to handle conflict and tumultuous situations and will provide you with the assistance and advice you would need to free yourself from the debt that you would have to incur. It takes a skilled professional like Bin Eid Advocates & Legal Consultants to get you out of these situations. They help the debtors negotiate and come to terms for an agreement with their creditors by pursuing a plan of composition.
With the help of a legal consultancy firm, a voluntary agreement between you (as debtors) and your creditors will be settled on under which you will be required to make a partial payment of the original debt owed.To make it fair and to give you enough chance, the creditor would give you a warning in written form and if you are unable to pay the debt within 30 days from the day of the warning, only then the bankruptcy procedure will be initiated.
When you have an ordinary debt of at least AED 100,000, then only your creditor will be able to seek initiation of the bankruptcy procedures.
Remember, as a debtor, you can request for a bankruptcy composition if you are facing a financial crisis. Please note that in order to be eligible for the request, you must not have stopped paying debts for more than 30 consecutive days.
Once the composition of bankruptcy is submitted to the court, the Committee of Financial Reorganization would appoint an expert for determining whether your assets would suffice the composition or not. A trustee would also be appointed who would prepare a pragmatic list of your creditors. Furthermore, two or more inspectors may be assigned whose job would be to ensure that the scheme of composition is being carried off accurately.
You would have to complete the entire procedure within three years. You can extend the period, but that would happen only if your creditor gives consent. This is another reason why you should hire a bankruptcy lawyer since he or she would accelerate the process and ensure that everything is completed within the deadline.
Smooth Continuation of Existing Business
Just because you are in debt and have gone bankrupt doesn’t mean that you would have to stop your business. However, to smoothly continue your business, you would require the help of the aforementioned procedure of requesting for a bankruptcy composition. To do that, you would need a bankruptcy lawyer.
The management of your business would have to take place in accordance with the scheme of the composition and will be supervised by officials appointed by the committee.
Quick Summary of the Benefits of Hiring a Bankruptcy Lawyer
Getting bankrupt is a scary situation that often puts people into a panic state. Getting a secondary expert help would help you make logical and orderly decisions. A bankruptcy lawyer would benefit you in the following ways:
So, as you see, getting the help of a bankruptcy lawyer from a reputed law firm the moment you get bankrupt in the UAE is crucial for both you and your business’s future.