The Artisan is an ideal choice for a business lunch
Insolvency, or bankruptcy, refers to the inability for a company to pay off its debts, whether due to negative cash flows or due to balance sheet insolvency, which shows negative net assets.
“In MENA region you need to modernise insolvency law and framework, and it is equally applicable to the GCC (Gulf Cooperation Council) countries and the UAE,” Dr. Nasser Saidi, Chief Economist of the Dubai International Financial Centre Authority, said.
Both Gulf and non-Gulf States in the MENA region have room for improvement compared to international standards and practice, in particular in the area of reorganisation of companies.
Emphasising on the framework that will facilitate on liquidation not on restructuring he said, “If you see the Mena region all the focus is on liquidation not on restructuring. We don’t have anything related to Chapter 11 and Chapter 7 Bankruptcy of the US.”
“It is easier to have a separate law for insolvency,” Dr Saidi said. Based on Common Law and the advantage of ‘purpose-built,’ the DIFC insolvency framework is the most robust and highest rated in the region.
Egypt is very active in formulating reforms on insolvency law in the region and Jordan is also taking steps for the same, he said.
It takes 3.5 years in the Mena region for a company to go through insolvency, double the OECD average of 1.7 years, while it takes 1.3 years for a company to go through insolvency proceedings
in Tunisia.
Ireland is the best in the world as the country takes a little over three months to go through insolvency proceedings, according to the World Bank’s Doing Business Report in 2009.
“Insolvency system is very integral part of overall financial system. In the last couple of years measures taken to attract FDI [foreign direct investment], but for exit it was not the same,” said Sumant Batra, President of INSOL, a global body of insolvency professionals. Batra said that a decent and dignified exit is important to encourage private entrepreneurs.
His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE, and Ruler of Dubai, in His capacity as the Ruler of Dubai, issued a Decree No. 57 of 2009 for the establishment of an insolvency regime for Dubai World and its subsidiaries. One of the reasons why DIFC insolvency law was chosen, Dubai World is itself formed by a royal decree, Dr Saidi said. The decree was necessary because Dubai World is not a joint stock company and was not able to seek court protection under the existing bankruptcy provisions in the UAE’ commercial code.
The Artisan is an ideal choice for a business lunch
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