Vol 16 (2019) - Issue 6

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Keeping up with the Trend: The New Dubai International Financial Centre Insolvency Law

Synopsis

The latest in the series of insolvency regime reformations in the Middle East is the new Dubai International Financial Centre ('DIFC') insolvency law; DIFC Law 1 of 2019 (the 'New Law'). The New Law repeals and replaces the DIFC Insolvency Law 3 of 2013 (the 'Old Law') and applies in the jurisdiction of the DIFC, meaning that it applies to all DIFC incorporated entities.
The reformation of the insolvency regime by the DIFC has been motivated by the need to provide more efficient and practical insolvency and restructuring mechanisms to debtors as well as creditors. As compared to the Old Law, the New Law provides significant additional restructuring options. It offers a formal restructuring procedure as a rescue tool to debtors, provides a mechanism for binding non-consenting creditors and generally promotes a more structured and effective system for businesses in financial distress.
While offering additional protection and tools to debtors willing to rescue their businesses by way of restructuring, the New Law ensures that these protections and tools are balanced with the rights offered to creditors to recover their debts. Together with the Insolvency Regulations, the New Insolvency Law is expected to increase investor confidence in the jurisdiction and bolster trade and investment in the UAE by bringing the DIFC in line with international best practice in cases of insolvency.
In this article, we have provided a summary of the key enhancements and refinements introduced by the New Law.