Restructuring & Insolvency
Restructuring and insolvency involves reorganising a company’s structure and finances to address financial distress or bankruptcy. This process aims to improve the company’s viability or manage its closure efficiently. It includes debt restructuring, asset sales, insolvency proceedings (filing for bankruptcy or liquidation) and legal proceedings. Restructuring and insolvency lawyers provide crucial guidance, ensuring compliance with laws and protecting stakeholders’ interests.
Introduction to Restructuring & Insolvency in the UAE
Restructuring and insolvency are key legal steps for businesses in financial trouble. Whether a company is facing operational issues, rising debts, or cash flow problems, restructuring and insolvency lawyers are vital in helping the business through tough times.
In the UAE, restructuring and insolvency laws have seen major changes recently with the Federal Decree-Law No. 9 of 2016 on Bankruptcy. This law provides a clear legal framework for businesses in financial trouble, outlining steps for restructuring, insolvency, liquidation, and bankruptcy, ensuring companies and creditors can resolve financial issues and protect their interests.
Legal Framework and Procedures
Restructuring means reorganising a company’s debts, operations, and management to improve its financial health. Restructuring lawyers work with business owners, creditors, and others to negotiate new debt terms, extend payment timelines, or reduce debt. The goal is to help the company continue operating while addressing its financial obligations.
Insolvency happens when a company can’t meet its financial obligations, and its liabilities exceed its assets. Insolvency proceedings can lead to liquidation, where the company’s assets are sold to repay creditors. Insolvency lawyers manage the liquidation process, ensuring legal requirements are met and assets are fairly distributed among creditors.
In the UAE, restructuring and insolvency law offers significant protection to businesses during restructuring. The UAE bankruptcy law includes a “protective composition procedure,” granting companies temporary protection from creditors while they develop a restructuring plan. During this time, the company is shielded from legal actions like debt recovery or asset seizures, allowing it to reorganise its finances
In the UAE, a company can face bankruptcy proceedings if it defaults on debts for over 30 consecutive business days or if its assets are insufficient to cover liabilities. Creditors may also initiate bankruptcy if a company fails to pay a debt of AED 100,000 or more within 30 days of a formal demand. A court-appointed expert assesses the company's financial situation to determine if restructuring is feasible. If not, liquidation follows, with a trustee selling assets and distributing proceeds to creditors according to legal priorities.
The Role of Creditors in Restructuring and Insolvency Law: Balancing Interests and Outcomes
Another key part of restructuring and insolvency law is the role of lenders. Lenders play a big part in deciding the outcome of restructuring or insolvency cases. Their willingness to negotiate or accept lower payments can determine if a company survives or shuts down. Sometimes, businesses might need to consider other legal steps, like filing for bankruptcy or starting a formal insolvency process. Insolvency lawyers help prepare and file the necessary legal papers, represent the company in court, and ensure the business follows all legal rules during the process.
Why Use Muhami for Restructuring & Insolvency Legal Services in the UAE
At Muhami, we understand the challenges that businesses face when dealing with financial difficulties. Our list of experienced restructuring and insolvency lawyers provides expert legal support to help companies manage their financial problems, negotiate with creditors, and find the best path forward. We provide practical, results-driven legal advice that helps businesses navigate the restructuring and insolvency process with confidence.
