Friday, 26 June 2009

Bankruptcy law call after Dubai boss flees

From ArabianBusiness 25 June 09

The Gulf News has a fuller explanation of the current bankruptcy laws in the UAE.
And to confirm what's in the following article, in Dubai you can be jailed for bouncing a cheque and unbelievably there is no system in place here for the person who's written the cheque to put a stop on it.
Lawyers on Thursday called for a review of UAE bankruptcy laws, after the owner of a Dubai gifts company fled the country with massive debts.
It emerged on Wednesday that Simon Ford, the owner of an events and alternative gifts company, had left the UAE after his firm became insolvent.
In an emotional letter to suppliers and customers Ford said that the UAE’s "lack of structured bankruptcy laws and a banking system which has zero flexibility on loan repayments" had forced him to flee the country.
But legal experts have now called for an overhaul of bankruptcy laws in the UAE-and urged a review into whether a bounced cheque should be a criminal offence.
“There have been discussions amongst lawyers and accountants as to the need for modernisation of the UAE insolvency regime," Raza Mithani, a senior advocate at law firm Al Tamimi told Arabian Business.
"The areas which are probably in most urgent need of review are the enactment of detailed provisions dealing with individual (non-trader) and cross-border insolvency, together with improved legislation to better facilitate the rescue of businesses in financial distress."
“A corollary to this would be a review of the law relating to bounced cheques and whether it is appropriate for it to continue to attract criminal sanction,” he added.
Currently there are no bankruptcy laws for ‘non traders’, which would include consumer bankruptcy cases such as employees of companies.
Mithani added: “There is also a need to encourage awareness of the legislation that already exists. This would enable businesses in difficulty to consider their options at the earliest possible opportunity. Such options may, depending on the circumstances, include entering into a formal or informal composition with creditors."

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