By Sabry El Khawas and Mahmoud Elharidi
The Dubai Court of Cassation recently set a new principle in relation to insolvency. The court stated that the commencement of a Debtor’s insolvency proceedings, and the liquidation of his money, would result in stopping all unilateral measures taken by ordinary Creditors, however, in cases where the Court decides to terminate insolvency proceedings and liquidate the money due to lack of funds or due to the Debtor’s proceeds being insufficient to pay the debts (wherein the insolvency proceedings shall not be applicable), the Creditors shall recover their rights to take unilateral measures against the debtor and will be able to enforce any judgment that they may have acquired, since the general purpose of insolvency is to liquidate a Debtor’s money and divide it pro rata to re-pay debts to Creditors.
The judgment by the Court also mentioned that the end of the insolvency and liquidation procedures does not prevent the declaration of insolvency pursuant to Article 46.4 of Law No. 47 for the year 2021 on insolvency.
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