UAE Law and Practice Contributed by: Abdelhak Attalah and Ghassan Hidar, Attalah Legal Consultancy
4. Statutory Restructuring, Rehabilitation and Reorganisation Proceedings 4.1 Opening of Statutory Restructuring, Rehabilitation and Reorganisation Article 16 of the New Bankruptcy Law stipulates that a creditor or group of creditors, or the supervisory entity if the debtor is subject to one, may file a restructuring or bankruptcy application before the competent court, requesting the opening of restructuring or bankruptcy proceedings in the event that the debtor fails to pay its debt to the creditor, provided that this debt is uncon - ditional, undisputed and due for payment after being served with a 30-day notice. 4.2 Statutory Restructuring, Rehabilitation and Reorganisation Procedure A creditor, debtor or supervisory entity may initiate restructuring procedures if the debtor’s business is viable, under these conditions: • resubmission of an application is permitted after three months if a previous restructuring plan was rejected by creditors or the Bankruptcy Court; • if restructuring procedures were previously termi - nated, a new application may be submitted after three months; and • no application can be made if the debtor has a final bankruptcy judgment, unless rehabilitated as per the law. Applications can be submitted at any time, with evi - dence of prior restructuring plan approval by the required majority. After initiating restructuring pro - cedures, the debtor can manage its business and assets under trustee supervision, conducting nec - essary activities that safeguard creditor interests, unless directed otherwise by the Bankruptcy Court, which may suspend the debtor’s management upon the request of a trustee, creditor or supervisory enti - ty, transferring such authority to the trustee, who assumes all powers unless stated otherwise. • the debtor has stopped payments; • the debtor is in a financial deficit; Upon restructuring initiation, a claims moratorium starts, and continues until the plan is ratified or ter -
minated by the Court. The Bankruptcy Administration provides a moratorium statement upon request. Within ten days of trustee appointment, the Bankrupt - cy Administration informs the trustee and provides debtor information. The trustee publishes a summary of the decision to initiate proceedings, inviting creditor claims within 30 days and notifying creditors. Simul - taneously, the debtor provides outstanding creditor, debt, contract and legal proceeding information, as requested by the trustee. The trustee maintains a register of: • creditor addresses, claim amounts and due dates; • secured creditor details, including guarantees; and • settlement requests and other relevant data. All creditors must submit debt documents within the specified timeframe. The trustee may request addi - tional information or verification. Debt verification by the trustee must be completed within 30 days of the submission deadline. The trustee submits a debt list detailing accepted and rejected debts, with annota - tions on approved debts. The court finalises a list of undisputed debts for approval, with provisional debt acceptance possible pending resolution of grievanc - es. If the Bankruptcy Court opens restructuring proce - dures, the debtor drafts a plan within three months, extendable upon Court approval. Failure to submit may lead to the termination of the procedure upon request of a creditor or supervisory entity. The debtor must notify creditors, the creditors’ com - mittee, the supervisory entity (if applicable) and the Bankruptcy Unit of the details of the restructuring plan meeting, including date and location. The meet - ing must be convened within 30 days of notifying the committee and its members. The debtor presides over the meeting; with majority approval, the trustee, a creditor or others may chair it. If the debtor fails to convene the meeting as required, the Bankruptcy Court will summon creditors to the meeting, upon the request of a trustee, creditor or supervisory entity. The trustee will chair this meeting.
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