Insolvency Law of DIFC, Law No.1 of 2019

 Insolvency Law of DIFC, Law No.1 of 2019

Dubai International Financial Center (DIFC) has enacted a new Insolvency Law and was announced on Tuesday. It was signed by the Vice President and Prime Minister of the UAE, Sheik Mohammed Bin Rashid Al Maktoum, which aims to balance the needs of all stakeholders in the context of distressed and bankruptcy situation in DIFC. This law facilitates more efficient and effective bankruptcy restructuring rule. This law provides a new administration process which will manage the mismanagement and misconduct.

The new insolvency law will be on effect from August 28, 2019. It introduces a new debtor in possession bankruptcy rule with best practice rule globally. The law enhances the rules for governing winding up procedures and also incorporates the UNICITRAL Model Law on insolvency proceedings with modifications for its application in the center.

Essa Kazim, the governor of DIFC, said, “ensuring that businesses and investors can function throughout the region with confidence is crucial to our role in connecting the economies of east and west”. “And are committed to enhancing the legislative infrastructure to provide the leading global institutions with the access which they need to grab the opportunities in the MEASA region, in Dubai”.

This law was introduced only after the regions biggest private equity firm Abraaj collapsed last year due to fraud allegations. By the enactment of this new law, it will increase the prospectus of helping and rescuing businesses and preserve the value by improving the DIFC’s standing as an international financial center by adopting the internationally recognized model law  that provides cross border insolvencies in complex multi–jurisdictional cases.