Understanding Business Debt Collection Practices In Dubai

by | Jul 27, 2018 | Lawyers and Law Firms

In the UAE, as well as in many countries in the Middle East, changes are occurring in their laws that are bringing them closer to what is seen in many other countries, including the UK, USA and throughout Europe.


One of the changes that are recent in Dubai is a law that allows for bankruptcy. Prior to 2016, this was not a possibility, and there is still a great deal of hesitancy to use the process due to many different cultural and business factors. All bankruptcy issues are managed by a Committee of Financial Restructuring, which acts like bankruptcy trustees to monitor cases outside of the courts.

The ability for a business to file for bankruptcy is a benefit for debt collection. In the past, the creditor would have a long, drawn-out process to attempt to the collection, which would eventually lead to the court system. However, even with a finding in favour of the creditor, it was still very difficult to collect.

With the new law, which does not apply to all companies, it is possible for a company in debt to apply for assistance with restructuring, with protective composition or with insolvency and liquidation.

Both restructuring and protective composition can help creditors with debt collection as this allows for the unsecured creditors to agree upon a repayment structure. There are time limits set with this process, typically three years for protective composition and five years with restructuring, with the possibility of an extension.

The new bankruptcy laws in Dubai do not address all issues with debt collection, but they do provide options for qualifying businesses and creditors. For those businesses not qualifying for bankruptcy, creditors will have a longer process in trying to collect debts through the traditional way of direct negotiation, demands and finally through the courts. Click here for more information.

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