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Bankruptcy law boosts confidence

The much-awaited bankruptcy, approved by the UAE Cabinet on Sunday, will support sustainable business development and help in attracting foreign investments to the UAE, Shaikh Hamdan bin Rashid Al Maktoum, Deputy Ruler of Dubai and UAE Minister of Finance, said.
"The law contributes in strengthening the financial, economic and legislative system in the UAE by putting in place a separate and modern law to avoid bankruptcy cases, including financial restructuring, composition procedures, restructuring debts and liquidation funds. Companies and individuals are now able to restructure their debt while avoiding bankruptcy liquidation," Shaikh Hamdan said in a statement on Monday.
He described the bankruptcy law as one of the most important foundations of the UAE legislative system considering its role in strengthening the investment environment and increasing the security level for creditors through implementing transparent, fast and flexible rules and procedures. "This will support sustainable business development and will help attract foreign investments due to increased trust in the economic environment and the flexible legislative infrastructure that protects investors' assets," Shaikh Hamdan said.
The cabinet's adoption of the bankruptcy law was timely and would make the national economy more competitive and investment environment more attractive, Rashid Al Balushi, CEO of Abu Dhabi Securities Exchange, said.
He said the move follows the directives of the wise leadership to build an advanced national economy capable of sustainable growth.
In a statement, Al Balushi stressed that the adoption of the law by the Council of Ministers will enhance the economic and investment legislative system in the UAE, thus contributing to better ranking of the state in the global indicators in terms of ease of doing business, competitiveness and entrepreneurship.
Mohan Valrani, senior vice-chairman and managing director of the Al Shirawi Group, said the landmark law would provide a lifeline to the businesses in financial distress by helping them to restructure debts. He said the adoption of the law is timely and it will promote investment and ease of doing business. "The growing startup culture will get a boost from this milestone law and that in turn will create the environment of creativity and innovation that will have a positive impact on the UAE. This law will also result in providing a lot of confidence to the ever-growing investors in UAE as it provides them globally acceptable legal frame work of carrying out business as is prevalent in major economies of the world," said Valrani.
Rizwan Sajan, chairman of Danube Group, said the bankruptcy law would help small- and medium-sized business owners in a big way.
"A number of genuine businessmen have had to leave the country due to pressure from banks and other financial institutions, even though they did not have intentions to do so. The introduction of new law will ensure that businessmen remain beneficiaries to the UAE. Moreover, such changes are bound to encourage a number of companies to invest in the UAE as they will be sure of the support offered by the government," said Sajan.
Paras Shahdapuri, chairman, Nikai Group, said the bankruptcy law would provide major relief to the trading and business community. He said the law would further integrate UAE's economy with the international business community. "This initiative will also prompt other GCC countries to come up with similar laws. This will drastically reduce the NPAs of banking industry and induce confidence between the various stake holders and in particular bring in healthier partnership between banks and its clients." Y. Sudhir Kumar Shetty, president, UAE Exchange, said the new legislation would definitely play a major role in boosting the confidence of the business community on one end and the financial institutions on the other. "This step has de-criminalised the process. Earlier, defaulters of corporate loans were directly taken to task without any opportunity to present their case. Now this new law will provide them with that perfect window to present their case and arrange other sources for settlement."
Kamal Vachani, group director, Al Maya Group, said the Cabinet approval of the UAE Bankruptcy Law is a significant step forward in paving the way for business growth and diversification in the country.
"The new law will enhance business confidence and bank's willingness to lend to SMEs. This law will help the companies to seek a professional way out if needed and boost their confidence in the system by improving the ease of doing business and encouraging more firms to establish businesses in the UAE," said Vachani.
- issacjohn@khaleejtimes.com