UAE Law and Practice Contributed by: Abdelhak Attalah and Ghassan Hidar, Attalah Legal Consultancy
ties, provided they do not harm creditors’ interests, unless the Bankruptcy Court dictates otherwise. Restrictions on a Company’s Use of Its Assets As outlined in Article 89, when restructuring proce - dures commence, the debtor remains in charge of managing its business and assets, but this occurs under the oversight of a trustee. The debtor is per - mitted to conduct all necessary commercial activities, if these activities do not compromise the interests of the creditors, unless the Bankruptcy Court intervenes with different instructions. The trustee has the authority to take all necessary actions to monitor the debtor’s financial operations and ensure the proper management of its assets and business. Nonetheless, the Bankruptcy Court holds the power to step in. Acting on its own initiative or based on a detailed request from the trustee, a credi - tor or a relevant supervisory entity, the Bankruptcy Court can decide within ten days of the request to remove the debtor, its board of directors or its manag - ers from their management roles. In such cases, man - agement responsibilities are transferred to the trustee, who then assumes all the powers typically held by the debtor, its board and executive management, unless the Bankruptcy Court specifies otherwise. Asset Disposition and Related Procedures Asset disposal during a restructuring process aligns with the reorganisation plan and is carried out by the debtor or the bankruptcy trustee. Business managers oversee the sale of assets, ensuring that purchasers acquire clear title free from claims under the supervi - sion of the bankruptcy trustee. Asset sales may occur through public auctions where creditors can bid, or pre-negotiated transactions can be conducted with the trustee’s approval if they benefit all creditors involved. New Money If it is necessary for the continuation of the debtor’s activity or the preservation of assets, the debtor may obtain loans or banking facilities with or with - out a guarantee. Secured financing obtained with the court’s approval has priority ranking. It is important to note that the new financing may be secured by a mortgage on any of the debtor’s unmortgaged or
mortgaged assets. In the latter case, the mortgage will rank next to existing mortgages on those assets.
4.5 The Position of Office Holders in Restructuring, Rehabilitation and Reorganisation Trustee
If there are multiple trustees, they must work together and are jointly responsible for their tasks. They may delegate to each other but not to others without the Bankruptcy Court’s permission. The trustee and their representative share joint responsibility, although the Court may divide work among trustees or assign spe - cific tasks, in which case a trustee is only responsible for their assigned work. If a legal entity is designated as a trustee, it must nominate one or more representatives to assume the duties of the trustee, with the entity remaining respon - sible for its representatives. The trustee can request the Bankruptcy Administra - tion to take decisions that assist in performing their tasks, including designating or delegating additional trustees. Trustees operate under the supervision of the Bank - ruptcy Administration, ensuring prompt follow-up pro - cedures and protection of the debtor’s and creditors’ interests. When managing the debtor’s assets and business, the trustee must preserve the assets and act on behalf of the debtor. If the debtor is supervised by a supervi - sory entity, the trustee must co-ordinate with the entity and the Bankruptcy Unit to ensure that funds in the debtor’s account are the debtor’s, and not customers’ funds held in trust. For companies, the trustee has the powers granted to the board of directors, chairperson, CEO and company director, as per the company’s memorandum of association. For actions requiring general assembly approval, the trustee must request the Bankruptcy Administration to present the matter to the Bankruptcy Court, which will decide within ten days.
485 CHAMBERS.COM
Powered by FlippingBook