Bad loans in UAE are ‘dramatically’ slowing

> FROM PAGE 21 “The law permits a pre-emptive settlement regime that allows active creditor participation in the creation of restructuring scheme thereby giving lenders greater assurance of repayment since the process is oversee by the courts.”

He said under the new law, the creation of the Financial Restructuring and Bankruptcy Committee will assist customers with restructuring their debts rather than forcing them to file for immediate bankruptcy and thereby protecting their ongoing businesses.

“A preventive composition under the supervision of the courts, will allow a customer to agree for a settlement with creditors, and the terms, if approved by the court, will be binding on all parties. The law allows a customer/ debtor to apply for new financing on a secured or unsecured basis if it is deemed essential for the continuation of the customers’ business under the supervision of the court appointed bankruptcy trustee. This will encourage business continuity for defaulted customers,” he said.

He argued that an individual bankruptcy law, which is also in the pipeline, would be “suicidal for the UAE” if there is no agreement with the expatriate’s home countries.

“Ultimately, no customer will be able to borrow money from retail. It is also good for the individual. Around 90 per cent of our borrowers are expats. If they borrow here, declare bankruptcy, are protected, they go home, they can start again there,” he said

The feasible option is that if a customer is declared bankrupt here, he should be simultaneously declared so in his home country.

— issacjohn@khaleejtimes.com