UAE VP orders creation of financial restructuring commitee

UAE Vice President and Prime Minister and Dubai Ruler Sheikh Mohammed bin Rashid Al Maktoum has ordered the formation of a committee to oversee the financial restructuring of companies in the country.

The resolution follows the introduction of a bankruptcy law at the beginning of last year designed to help businessmen avoid jail if their company fails to pay its debts.

Read: No more jail time for bad debts under new UAE bankruptcy law

The Financial Reorganisation Committee comprises nine members from various federal and local government departments who will serve a three-year term under the chairmanship of the undersecretary of the Ministry of Finance.

They will be tasked with overseeing financial restructuring procedures outside of the scope of the court, appointing experts in the field and establishing an electronic record of individuals with a bankruptcy ruling.

Other responsibilities include raising awareness of the bankruptcy law, submitting reports and submitting suggestions to improve the process.

Prior to the law’s introduction the country did not have bankruptcy legislation, making it difficult for companies to restructure. Executives at troubled firms would often flee the country knowing they faced jail for debts.

However, the new legislation does not remove the possibility of a prison sentence.

Those that fail to pay debts and deliberately avoid filing for bankruptcy face five years in jail and a fine of up to Dhs1m ($272,000).