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Legal Focus
JANUARY 2013
Corporate Restructuring and Insolvency Law dubai
Insolvency and restructuring levels historically increase in frequency whenever the world suffers from an economic crisis, as it has done in the last four years. Of course, when a company is facing insolvency or has to turn to a restructuring, complex and potentially difficult legal implications come along and sound, efficient advice is essential. To find out about the issues companies face when dealing with insolvency and restructuring, Lawyer Monthly speaks to Neale A. Downes, a partner with Taylor Wessing (Middle East) LLP in Dubai.
Please introduce yourself, your role and your firm.
I joined Taylor Wessing in June 2012 as the Head of Banking & Finance, having previously spent over nine years with another international law firm in Bahrain. My particular areas of expertise include Islamic finance, asset-backed and asset-based financing (including securitisations), syndicated lending, project finance, acquisition finance and other leveraged and structured finance. I act for a wide range of international and local banks and other financial institutions.
Taylor Wessing is an international law firm with over 1000 lawyers working across 22 offices in Europe, the Middle East and Asia, offering an integrated service across the full range of practice areas, with core strengths in corporate, finance, real estate, IP and private wealth.
the restructuring and insolvency market has evolved radically over the last few years. How have you seen the market change recently in your jurisdiction?
The “market” in the UAE and indeed, the wider GCC is, in reality, one historically more focused on and active in the restructuring, rescheduling and workout arena.
The occurrence of significant true insolvencies – i.e. receivership, administration or liquidation (or local equivalents) – is actually quite rare or, at least, not something which tends to be regularly in the public eye.
The successive shocks of the global financial crisis, the ensuing liquidity crunch and then the bursting of what had become a real estate bubble, left many UAE-based companies (some of which are very significant entities) wrestling
with debt mountains and multiple obligations to multiple creditors which, ultimately, they were unable to service.
Nevertheless, in the vast majority of cases, those debtors have been able to put in place initial standstill arrangements and then, by way of often tortuous but largely consensual processes, to agree various means by which those obligations could be restructured, deferred, be the subject of “haircuts”, be re-collateralised and/or otherwise put back on a footing, designed to achieve a hopefully, substantial payout to creditors.
However, the journey along that restructuring path has led to frequent and vocal criticism of the local laws, particularly the opaqueness, paucity and lack of fitness for purpose in a 21st century business environment, of the UAE’s insolvency law.
Hence, in many respects, the real evolution of insolvency law in the UAE is only just beginning. That process has been driven by a realization that an improved legal regime and greater certainty of the application of that law, will be of benefit to both creditors and debtors.
What do you think are the advantages and disadvantages of a restructuring programme as opposed to insolvency?
The UAE’s new insolvency law is in draft form and is expected to be issued in late 2012 or more likely, early 2013.
The new law is intended: • to be less draconian than the existing legislation
• to move away from the perceived stigma attaching to businesses or individuals that get into financial difficulties