Up to Dh100,000 fine for misusing UAE's insolvency law
Each insolvency debtor shall be punishable by imprisonment for a period not exceeding two years.
The insolvency law that was approved by the UAE Cabinet earlier this week is designed to protect debtors from legal prosecution, decriminalise the financial obligations of insolvent persons, and offer them an opportunity to work, be productive and provide for their families. However, the Ministry of Finance has specified the penalties that will be imposed on those who misuse the law.
Also read: All you need to know about UAE insolvency law
Any creditor who commits any of the following acts shall be liable to imprisonment and a fine of not less than Dh10,000 and not more than Dh100,000:
- If they make a claim relating to a fake or sham debt against the debtor.
- If they increasesthe debts to the debtor illegally.
- If they vote in any meetings on decisions relating to the settlement of financial - If, following the court's decision to commence insolvency proceedings and the liquidation of funds, the debtor knowingly concludes an agreement which gives them special advantage to the detriment of other creditors.
Each insolvency debtor shall be punishable by imprisonment for a period not exceeding two years and/or a fine of not less than Dh20,000 and not exceeding Dh60,000, if the insolvency debtoris proved to cause a loss to creditors as a result of one of the following acts:
The UAE issued the Insolvency Law for Natural Persons to address the inability of a debtor (who is not engaged in economic activity and is not a trader) to pay his debts caused by financial distress, to protect the common interests of the creditor and the debtor in a fair manner. pic.twitter.com/6u9vJwTK9D- Ministry of Finance (@MOFUAE) November 19, 2019
- Spending large sums of money in speculative business that is not required by their usual business, or in the purchase of services, goods or materials for personal or domestic use that are not commensurate with their turbulent financial situation, or they have engaged in gambling, knowing that their creditors may be adversely affected.
- Paying the debts of one of the creditors, and in turn causing damage to the remaining creditors within a period of sixmonths prior to the submission of their request to settle their obligations or declare insolvency.
- Disposing of their funds in bad faith and at less than the market price, or resortingto harmful means, to damage creditors with the intention of delaying the declaration of insolvency and liquidating their funds.
- Any disbursement of money knowing that it violates the terms of the plan.
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