Bankrupt firm gets back in business, thanks to Abu Dhabi court

Abu Dhabi - The case is the first of its kind in the region.

A company in Abu Dhabi, which had already filed for bankruptcy, managed to get back in business, after judicial authorities had intervened in its operations.
The Abu Dhabi Judicial Department (ADJD) on March 5 shared how it helped the heavily indebted contracting firm, beefing it up with technical expertise and supervising its restructuring process. The case is the first of its kind in the region, authorities said.
Official documents showed that after failing to settle its trade obligations, including debts, the limited liability company applied for bankruptcy under Federal Law No. 9 of 2016 on insolvency.
The company, which was established in 2008, faced financial difficulties and could no longer engage in any contracting business. It had also failed to pay its debts that exceeded its operational capital by 18 times.
When the case reached the Abu Dhabi Court of First Instance, it had provided the company with a team of experts who had helped in restructuring the firm and getting it back on track.
In accordance with the insolvency law, the court appointed a specialised manager, who took over the supervision of the company throughout the restructuring process until it managed to resume its operations. The process included rounding up the company's debts, paying them, renewing its commercial licence, and achieving liquidity of five times its capital.
According to court officials, the bankruptcy law that came into effect in 2016 seeks to support companies when financial difficulties emerge. It offers creditors and debtors increased flexibility in dealing with financial distress, while ensuring certainty and security for business owners and investors.
The law also enables firms to effectively negotiate with their creditors.
It applies to all onshore and free-zone companies in the UAE - with the exception of companies in the financial free zones - and offers protection for employees, shareholders and directors of companies undergoing court-led insolvencies.
ismail@khaleejtimes.com

• Abu Dhabi