A qualified engineer, CP Rizwan is a technically correct batsman who can also take wickets with his part-time spin
“While the creditworthiness of borrowers has always been of paramount concern to creditors, recent developments in the debt markets, including the deteriorating credit of some major corporate borrowers, the recent credit crunch and the implementation of Basel II guidelines, have put a spotlight on creditors’ prospects for recovery of principal and interest after a borrower default,” said Agnes De Petigny, Managing Director, Standard & Poor’s Ratings Services.
The report, “Debt Recovery For Creditors And The Law Of Insolvency In The UAE,” is published in connection with S&P’s global assignment of recovery and issue ratings.
It reviews the distinctive characteristics of the insolvency regime in the UAE from both a secured and unsecured creditor’s perspective, and assesses how these characteristics may affect recovery prospects.
The report added, “While it would be an overstatement to claim that the UAE is an unfriendly jurisdiction for secured creditors, the laws and regulations addressing creditors’ rights — and the effect of a debtor’s insolvency on those rights—are not as evolved as those in many more developed jurisdictions,” said James Penrose, Managing Director and Senior Counsel, Standard & Poor’s Ratings Services.
“In addition, as of the time of writing there has never been a major corporate insolvency in the UAE, the local laws and regulations relating to creditors’ rights in the event of a debtor insolvency remain substantially untested.”
In the report S&P classified the insolvency regime of the UAE in Group B of its global classification framework. This framework details jurisdictions that in S&P’s opinion offer the greatest level of creditor protection in the highest group (Group A), and those that provide limited safeguards for creditors in the lowest group (Group C).
Last week, Dubai Chamber of Commerce and Industry published a study calling for urgent reforms to the UAE credit market saying, “The reforms are essential for its regional and international standing”. In particular it advocated the establishment of a credit bureau that would collect and disseminate credit data. mark_townsend@khaleejtimes.com
A qualified engineer, CP Rizwan is a technically correct batsman who can also take wickets with his part-time spin
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