The Dubai Court of First Instance concludes that preventive composition, restructuring, bankruptcy, and liquidation are only possible if the debtor company has existing assets.
In a recent judgment issued on 26 April 2023 the Dubai Court of First Instance rejected the liquidation application of an indebted company on the basis that the company does not have any assets that could be liquidated.
The Court in reaching such decision considered that preventive composition, reconstructing, bankruptcy and liquidation are only possible if the debtor company has existing assets that are identified by the courts. This has, however, left an indebted company in financial difficulty in a position where it is not able to restructure or liquidate through the court and creditors not being able to recover the debts owed to them.
Although the judgment of the Court of First Instance is not final and is subject to appeal, the judgment highlights the difficulties that creditors may face when their debtors do not have any identifiable assets in the UAE.