Insolvency Law DIFC Law No. 1 of 2019

Part 1: GENERAL .........................................................................................................................................................1

1. Title and repeal.....................................................................................................................................................1

2. Legislative Authority.............................................................................................................................................1

3. Application of this Law .........................................................................................................................................1

4. Date of enactment and commencement...............................................................................................................1

5. Interpretation........................................................................................................................................................2

6. Administration by the Registrar.............................................................................................................................2

Part 2: COMPANY VOLUNTARY ARRANGEMENTS............................................................................................................3

7. Company arrangements.........................................................................................................................................3

8. Moratorium ............................................................................................................................................................3

9. Consideration of proposal ....................................................................................................................................3

10. Decisions of the Company and its creditors .......................................................................................................3

11. Effect of approval................................................................................................................................................3

12. Implementation of proposal.................................................................................................................................4

Part 3: REHABILITATION...............................................................................................................................................5

13. Scope...................................................................................................................................................................5

14. Common provision of the Regulations that apply under this Part.......................................................................5

15. Application for Rehabilitation Plan and automatic moratorium..........................................................................5

16. Moratorium period................................................................................................................................................5

17. Effect of the moratorium .....................................................................................................................................5

18. Effect of the moratorium on contracts ...............................................................................................................5

19. Relief from the moratorium..................................................................................................................................6

20. Appointment of the Rehabilitation Nominee ......................................................................................................6

21. Qualification of the Rehabilitation Nominee .......................................................................................................6

22. Management of the Company...............................................................................................................................6

23. Termination and expiration of the moratorium period ........................................................................................6

24. Directions Hearing...............................................................................................................................................7

25. Meeting and voting requirements........................................................................................................................7

26. Challenges to the Rehabilitation Plan ................................................................................................................8

27. Post Plan Hearing and Court sanction.................................................................................................................8

28. No Court sanction and winding up ......................................................................................................................8

29. Effect of Court sanction.......................................................................................................................................9

30. Discretionary relief in conjunction with a Rehabilitation Plan .........................................................................10

31. Priority funding .................................................................................................................................................10

Part 4: ADMINISTRATION.............................................................................................................................................11

32. Application for an order appointing an Administrator ......................................................................................11

33. Effect of order ..................................................................................................................................................11

34. Moratorium.........................................................................................................................................................11

35. Common provisions of the Law and Regulations that apply under this Part ....................................................13

36. General powers..................................................................................................................................................13

37. General duties....................................................................................................................................................14

38. Protection of interests of creditors and Shareholders......................................................................................14

39. Discharge or variation of order appointing an Administrator ............................................................................14

40. Vacation of office .............................................................................................................................................15

41. Release of Administrator...................................................................................................................................15

Part 5: RECEIVERSHIP.................................................................................................................................................16

42. Powers of Receivers and Administrative Receivers..........................................................................................16

43. Notification that Receiver appointed ...............................................................................................................16

44. Interaction of Receivers and Administrative Receivers.....................................................................................16

45. No duty to enquire as to power of Receiver and Administrative Receiver ........................................................17

46. Power to dispose of property subject to a security interest.............................................................................17

47. Agency and liability for contracts......................................................................................................................17

48. Vacation of office .............................................................................................................................................17

49. Report by Administrative Receiver.....................................................................................................................17

50. Committee of creditors .....................................................................................................................................18

Part 6: WINDING UP ...................................................................................................................................................19

51. Alternative modes of winding up.......................................................................................................................19

52. Regulations........................................................................................................................................................19

53. Powers of Liquidator .........................................................................................................................................19

54. Circumstances in which a Company may be wound up voluntarily....................................................................20

55. Notice of resolution to wind up ........................................................................................................................20

56. Commencement of winding up..........................................................................................................................20

57. Effect on business and status of Company.......................................................................................................20

58. Avoidance of share transfers after winding-up resolution...............................................................................20

59. Statutory declaration of solvency......................................................................................................................21

60. Members’ Voluntary Winding Up ........................................................................................................................21

61. Appointment of Liquidator ................................................................................................................................21

62. Liquidator's report at each year's end...............................................................................................................21

63. Final account ....................................................................................................................................................22

64. Effect of Company's Insolvency ........................................................................................................................22

65. Conversion to Creditors' Voluntary Winding Up .................................................................................................22

66. Application of this Chapter................................................................................................................................23

67. Directors to lay statement of affairs before creditors.......................................................................................23

68. Appointment of Liquidator.................................................................................................................................23

69. Appointment of Liquidation Committee.............................................................................................................24

70. Directors' powers...............................................................................................................................................24

71. Power to disclaim onerous property and vesting of property............................................................................24

72. Vacancy in office of Liquidator..........................................................................................................................25

73. Liquidator's report at each year's end...............................................................................................................25

74. Final account ....................................................................................................................................................26

75. Distribution of Company's property...................................................................................................................26

76. Appointment or removal of Liquidator by the Court...........................................................................................27

77. Reference of questions to Court........................................................................................................................28

78. Expenses of voluntary winding up.....................................................................................................................28

79. Saving for certain rights ...................................................................................................................................28

80. Removal or resignation of Liquidator.................................................................................................................28

81. Circumstances in which Company may be wound up by the Court....................................................................30

82. Definition of inability to pay debts....................................................................................................................30

83. Application for winding up.................................................................................................................................30

84. Application for winding up on grounds of interests of the DIFC........................................................................30

85. Voiding of property dispositions........................................................................................................................30

86. Voiding of attachments.....................................................................................................................................31

87. Commencement of winding up by the Court .....................................................................................................32

88. Consequences of winding-up order..................................................................................................................32

89. Investigation procedures...................................................................................................................................32

90. Choice of Liquidator by creditors and Contributories .......................................................................................33

91. Appointment of provisional Liquidator..............................................................................................................33

92. Liquidation Committee ......................................................................................................................................33

93. General functions in winding up by the Court ...................................................................................................34

94. Vesting of Company property in Liquidator .......................................................................................................34

95. Final account ....................................................................................................................................................34

96. Power to stay proceedings................................................................................................................................35

97. Power to exclude creditors not proving in time ................................................................................................35

98. Payment of expenses of winding up .................................................................................................................35

99. Preferential debts..............................................................................................................................................35

100. Power to disclaim onerous property................................................................................................................36

101. Rescission of contracts by the Court .............................................................................................................36

102. Notification that Company is in Liquidation....................................................................................................36

103. Information as to pending Liquidations...........................................................................................................36

104. Reference of questions to Court......................................................................................................................36

105. Dissolution and early dissolution....................................................................................................................37

106. Removal or resignation of Liquidator ..............................................................................................................37

107. Fraud in anticipation of winding up ................................................................................................................39

108. Transactions in fraud of creditors ..................................................................................................................39

109. Falsification of Company's books....................................................................................................................39

110. Material omissions from statement relating to Company's affairs..................................................................39

11. False representations to creditors....................................................................................................................40

112. Fraudulent trading ..........................................................................................................................................40

113. Wrongful trading .............................................................................................................................................40

114. Misconduct in course of winding-up...............................................................................................................40

115. Remedy ...........................................................................................................................................................41

116. Restriction on re-use of Company names .......................................................................................................41

Part 7: RECOGNISED AND FOREIGN COMPANIES ..........................................................................................................42

117. Proceedings in respect of Foreign Companies................................................................................................42

118. Application of this Part in relation to Recognised Companies........................................................................42

119. Winding up Recognised Companies.................................................................................................................42

120. Outstanding property of a defunct Recognised Company...............................................................................43

Part 8: OTHER TYPES OF COMPANY.............................................................................................................................44

121. Application of the Law to other types of Company .........................................................................................44

Part 9: APPLICATION OF THE LAW TO LIMITED LIABILITY PARTNERSHIPS.....................................................................45

122. Application to Limited Liability Partnerships...................................................................................................45

Part 10: INSOLVENCY PRACTITIONERS .......................................................................................................................46

123. Restrictions on service as Liquidator or Receiver...........................................................................................46

124. Qualification and registration of insolvency practitioners .............................................................................46

125. Register of insolvency practitioners and official Liquidators.........................................................................46

126. Obligation of disclosure to the Registrar.........................................................................................................46

127. Supervision of insolvency practitioners .........................................................................................................47

Part 11: MISCELLANEOUS ..........................................................................................................................................49

128. Power to make Regulations.............................................................................................................................49

129. Getting in the Company's property..................................................................................................................49

130. Duty to co-operate with office-holder............................................................................................................50

131. Inquiry into Company's dealings......................................................................................................................51

132. Transactions at an undervalue .......................................................................................................................51

133. Preferences.....................................................................................................................................................51

134. Invalid security interests.................................................................................................................................52

135. Relevant time under Articles 132 and 133 ......................................................................................................52

136. Application of other laws in relation to receivership and winding up.............................................................52

137. Power of Court to declare dissolution of Company void .................................................................................53

138. Contraventions and administrative notice of fine...........................................................................................53

139. Remote attendance at meetings.....................................................................................................................54

140. Use of websites ..............................................................................................................................................55

141. Public Register ...............................................................................................................................................55

Schedule 1 INTERPRETATION .....................................................................................................................................57

Schedule 2 POWERS OF ADMINISTRATIVE RECEIVER .................................................................................................62

Schedule 3 POWERS OF LIQUIDATOR IN A WINDING UP................................................................................................63

Schedule 4 UNCITRAL MODEL LAW............................................................................................................................64

Schedule 5 FINES......................................................................................................................................................73