UAE Law and Practice Contributed by: Abdelhak Attalah and Ghassan Hidar, Attalah Legal Consultancy
court will not accept preventative settlement appli - cations. If the debtor submits multiple applications, preventative settlement takes priority, followed by restructuring, and then bankruptcy adjudication. The court will first consider the original application before any precautionary ones. 5.2 Course of the Liquidation Procedure If the Bankruptcy Court accepts the application to open restructuring or bankruptcy adjudication proce - dures, it will designate the trustee nominated by the Bankruptcy Unit in the same decision. The Court will also assign a Bankruptcy Administration employee to affix seals on the debtor’s premises, books, papers and assets which it must do within ten days,. The employee must then prepare and submit a report on the sealing to the Court. The trustee must invite the debtor and creditors to a meeting within 20 days of receiving the debtor’s assets to discuss liquidation and distribution propos - als, notifying them at least ten days before. The trus - tee will chair the meeting, unless a majority approves another chair. If the debtor is under a regulatory body, the Bankrupt - cy Unit must also be invited. The Bankruptcy Court will resolve any disputes regarding the meeting within ten days of an application. If the trustee fails to con - vene the meeting, the court may assign the Unit to do so. The trustee must draft a liquidation and distribu - tion plan within 30 days of the creditors’ meeting and notify relevant parties, with a possible extension of up to three months. The trustee will also call a meeting for creditors to approve the plan within 30 days of notification. The Bankruptcy Court may approve the plan, includ - ing proposals to sell the debtor’s assets through vari - ous methods. The debtor or any relevant party may submit an offer to purchase the debtor’s assets if those assets are being sold through a public auction. The trustee must develop a plan to liquidate the debt - or’s assets and distribute the proceeds to creditors within 30 days of the creditors’ meeting, and com - municate this plan to the creditors’ committee. During meetings, the trustee presides but may be replaced
by a creditor or another party with majority approval. For the approval of issues, more than half of the total debts must be represented by the attending creditors, and at least two-thirds of the represented debts must vote in favour. 5.3 The End of the Liquidation Procedure(s) If the bankruptcy proceedings are halted due to insuf - ficient funds before the conciliation is ratified, the Bankruptcy Court may decide to close the case. When the bankruptcy is closed due to lack of funds, each creditor retains the right to pursue individual legal actions as permitted by law. If a creditor’s claim has been validated and accepted in bankruptcy, they may enforce the claim against the debtor, as outlined by the provisions of the New Bank - ruptcy Law. The bankruptcy trustee is responsible for the docu - ments provided by creditors for a period of three years following the closure of the bankruptcy. The bankrupt party or any interested party can request the Bank - ruptcy Court to reverse the closure decision if it is demonstrated that there are sufficient funds to cover the bankruptcy expenses or if an adequate amount is provided to the trustee. After preparing the final list of creditors as required by law, the Bankruptcy Court may, at the request of the bankrupt party or the trustee, issue a declaration of bankruptcy termination if one of the following condi - tions is met: • all debts on the final list of creditors are paid; or • adequate funds or a bank guarantee are deposited to cover the debtor’s debts. The Bankruptcy Administration must announce the closure decision in accordance with Article (35) of the New Bankruptcy Law and register it in both the Bank - ruptcy Register and the Commercial Register within ten days of its issuance.
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