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Restructuring and insolvency law in Ajman, United Arab Emirates, is a branch of commercial and financial law focused on helping businesses and individuals address financial distress. The aim is to provide legal mechanisms for debt recovery, asset management, business rehabilitation, and, where necessary, the orderly liquidation of assets to satisfy creditors. Ajman, as one of the seven emirates, follows federal UAE legislation, most notably the UAE Federal Bankruptcy Law, with some local procedural specifics. These laws seek to balance the interests of debtors and creditors, avoid unnecessary bankruptcies, support economic stability, and encourage business continuity wherever possible.
Dealing with restructuring or insolvency in Ajman can be a complex process, requiring a firm understanding of UAE’s legal framework, commercial regulations, and court procedures. A lawyer specialized in restructuring and insolvency can help you in many scenarios, including:
Legal representation is crucial because any misstep in restructuring or insolvency matters can lead to loss of assets, business license revocation, or personal liability for directors and owners.
Ajman’s approach to restructuring and insolvency is governed at the federal level primarily by UAE Federal Law No. 9 of 2016 on Bankruptcy, as amended. This law introduced modern procedures for financial restructuring, protective composition (a debt settlement process), and insolvency liquidation. Key aspects include:
Ajman, like other emirates, applies these federal laws but may have local court procedures, deadlines, and additional compliance rules. Free zones in Ajman may also be subject to special regulatory requirements.
Restructuring is the process where a financially distressed business reorganizes its debts and assets to restore viability, often by agreement with creditors. Insolvency refers to the legal state where a business or individual cannot meet their financial obligations as they come due, potentially resulting in bankruptcy or liquidation.
If your business faces cash flow problems, mounting debts you cannot pay, or creditor pressure, early legal advice can help identify restructuring options and potentially avoid insolvency.
Currently, UAE bankruptcy law covers companies and traders, not private individuals. However, there are personal insolvency procedures under Federal Decree-Law No. 19 of 2019 that apply to individuals facing financial difficulties.
Options include out-of-court settlements, formal financial restructuring, protective composition (a court-supervised agreement with creditors), and court-supervised insolvency proceedings.
Protective composition is a court-approved process that allows a financially troubled debtor to propose a repayment plan to creditors, often with a standstill on legal actions, under court supervision.
Creditors may be restricted from enforcing security during specific court-supervised procedures, such as protective composition or bankruptcy moratoriums, subject to court approval.
Company directors can face personal liability for wrongful trading, preferential treatment of creditors, hiding assets, or failing to initiate timely bankruptcy procedures if required by law.
The timeline can vary significantly based on case complexity, company size, number of creditors, and court workloads. Some procedures may take several months to a few years to conclude.
With court approval, many companies can continue trading during restructuring procedures, often managed by appointed supervisors or trustees.
Employee claims, such as unpaid salaries, usually receive priority in asset distribution. However, employment may be terminated if business operations are ceased or assets liquidated.
Those seeking information or assistance regarding restructuring and insolvency in Ajman may find helpful resources at:
If you are facing financial difficulties or your business is at risk of insolvency in Ajman, consider the following steps:
Early and informed action, with the guidance of legal experts, can greatly improve your chances of achieving the best possible outcome during financial distress in Ajman.
