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Resolving Insolvency in

United Arab Emirates

Below is a description of the time, cost and outcome of the most common insolvency proceeding in each economy under the case study assumptions, as well as the strengths and weaknesses in existing insolvency regulations in four areas: commencement of proceedings, management of debtor’s assets, reorganization proceedings and creditor participation.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 190 economies. The most recent round of data collection was completed in June 2016.

Compare United Arab Emirates to 189 other economies.

  • Indicator Explanation Answer
    Recovery rate (cents on the dollar) 29.0
    Proceeding BizBank will most likely initiate foreclosure proceedings, because insolvency proceedings are very rare. Liquidations take longer and cost more than foreclosure, while the return to the bank may be less. foreclosure
    Outcome The hotel can only continue operating if another company buys it, which is not a likely outcome. piecemeal sale
    Time (in years) First, the bank will need to notify the hotel of its intent to enforce its rights. If the debtor does not cooperate, the notice period can take up to 5-6 months. BizBank will then petition the court for an execution order. Mirage will be able to respond to BizBank’s claims and present its case before the execution order is granted. This process will take up to 1 year. After BizBank obtains the execution order, it will have to schedule another court date to enforce the execution order. The court will appoint a trustee to evaluate and sell Mirage’s assets. This part will take up to 8-12 months. Hotel’s assets will be sold at a public auction and at least two auctions will probably be held before the assets can be sold successfully. It will take up to 1 year to sell the assets. Some contributors from the Economic Court mentioned that the time and cost is reduced for 2015 due to the electronic filing but most contributors said that it changed the system but it does not necessarily change the time to look at cases as we followed up with them. The cost also remains the same. 3.2
    Cost (% of estate) Major expenses will include: Attorney’s fees – 10% of the value of the estate, Expert fees – 7% of the value of the estate, Auctioneer’s fees – 2.7% of the value of the estate, Court fees - <1% of the value of the estate. 20.0
    Answer Score
    Strength of insolvency framework index (0-16) 8.0
    Commencement of proceedings index (0-3) 2.0
    What procedures are available to a DEBTOR when commencing insolvency proceedings? (b) Debtor may file for liquidation only 0.5
    Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a creditor may file for liquidation only 0.5
    What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) Debtor is generally unable to pay its debts as they mature 1.0
    Management of debtor's assets index (0-6) 4.0
    Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the debtor? Yes 1.0
    Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? Yes 1.0
    Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0
    Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0
    Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of insolvency proceedings? No 0.0
    Does the insolvency framework assign priority to post-commencement credit? (c) No priority is assigned to post-commencement creditors 0.0
    Reorganization proceedings index (0-3) 0.0
    Which creditors vote on the proposed reorganization plan? N/A 0.0
    Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as what they would obtain in a liquidation? No 0.0
    Are the creditors devided into classes for the purposes of voting on the reorganization plan, does each class vote separately and are creditors in the same class treated equally? No 0.0
    Creditor participation index (0-4) 2.0
    Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency representative? Yes 1.0
    Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? No 0.0
    Does the insolvency framework provide that a creditor has the right to request information from the insolvency representative? No 0.0
    Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting creditors' claims? Yes 1.0