This Decree-Law on the Insolvency of Natural Persons which has been issued on 29 August 2019
and supposed to come into effect in the beginning of 2020, aims at enhancing the competitiveness
of the UAE by ensuring the ease of doing business, creating favourable conditions for individuals
facing financial difficulties and protecting those who are unable to pay their debts because of
their bankruptcy.

Most of us know that in any ‘new legislation’ there are terms that are not always interpreted
accurately, so to start off with definitions of those terms is imperative. Click on the below
link to download the summary of Federal Decree-Law No. 19/2019 On Insolvency, which may be
complicated but contains information you or your attorney need to know.

Definitions

State: The United Arab Emirates.

Ministry: The Ministry of Finance.

Minister: The Minister of Finance.

Court: The competent court in accordance with the rules of jurisdiction
contained in the Federal Law No. 11/1992 herein mentioned.

Debtor: The insolvent physical person.

Debtor's Debt: Debts due by the debtor and arising from an obligation
thereof prior to the date of the Court's
decision to open the Insolvency proceedings.

Debtors' Funds: Movable and immovable
properties owned by the Debtor on the date of the decision to open the
Insolvency proceedings or during any of the proceedings provided for in this
Decree-Law.

Debtor's Business: The activities wherein the Debtor has been engaged
or is still engaged while taking any of the
proceedings provided for in this Decree-Law.

Cessation of Payment: The Debtor's
inability to pay any outstanding debt.

Interested Party: A physical or
juristic person who has a right or interest in any
proceedings provided for in this Decree-Law.

Exchange Rate: The exchange rate of the AED against foreign
currencies declared by the Central Bank of the United Arab Emirates.

Measures: Necessary measures taken by
the Court with a view to the safekeeping or management of the Debtor's Funds in
accordance with the provisions of this Decree-Law.

Roster of Experts: The Roster of Experts accredited in accordance
with the provisions of the Federal Law No.
9/2016.

Expert: The Expert registered in the Roster
of Experts.

Trustee: The Trustee appointed by the
Court from among the Experts on the Roster of Experts.

Plan: The plan for the settlement of
the Debtor's financial obligations, prepared in accordance with the provisions
of this Decree-Law.

Insolvency: Facing current or anticipated financial
difficulties that render the Debtor unable to pay his debts

Scope of Application

Scope of this Decree applies to Debtors
not subject to the provisions of Federal Decree-Law No. 9.

Settlement of Financial Obligations

Debtors may file with the Court, excluding any litigants to settle
financial obligations. Some of the reasoning for any filing can be a memorandum
setting forth the financial position, data
relating to his income, inside or outside the State, professional, vocational
or craft status, liquidity, and projections for the previous twelve (12) months
of any filing. In addition, any filing
must contain names and addresses of creditors whose debts are not paid or are
not expected to be paid by the Debtor, the amount of each debt, the dates of
maturity, and the securities provided to the creditors, if any. It must also
include Debtor's movable and immovable
property inside and outside the State and the approximate value of each, the
jurisdiction and specific actions taken against the Debtor, must submit a
statement explaining current or anticipated financial difficulties and that is
unable or is expected to not be able to pay all of his debts, whether due at the
time of submission of memorandum or any application in the future. Debtor must
reveal any funds necessary to support Debtor, his family and dependents. Also,
any statement by Debtor projecting intent settle his financial obligations and
choosing an Expert. Debtor must also disclose any financial transfers outside
the State for the previous twelve (12) month, and documents supporting the
application or requested by the Court.

Failure to Complete the Required Data

If the Debtor is unable to provide any
of the documents or data required in accordance with this Decree-Law, a
statement of reasoning is required.
Also, may deem documents submitted are not enough to decide on the
application, it may grant the debtor a time-limit to submit additional data or
documents.

Payment of Fees, Expert Fees and Expenses

The Debtor shall pay the judicial fees
which the court will determine an estimate of
expertise fees, expenses expected for the financial settlement,
proceedings and notify

the Debtor thereof no later than the
day following the submission of the application. It is required of Debtor to
deposit with the Court's treasury, cash or a bank guarantee on the date determined
by the Court to cover expert fees and any fees paid in preference to all other
creditors. The Debtor can request of the Debtor, postpone the deposit of the
cash or bank guarantee provided, the Debtor has no money to cover the said
expenses and fees on the date of submission of the application, provided that
such expenses and fees be paid in preference to all other creditors. The Court
shall one or more Experts to assist the Debtor therein and any Expert shall
perform their duties jointly and the decisions shall be taken by majority. The
Court may divide the tasks among the Experts and determine their mode of work,
whether jointly or individually. The Court shall notify the Expert any decision
of his appointment the day following the issuance of its decision to open the
proceedings and shall provide him with all the information available thereto on
the application. Any Expert shall not be a creditor of the Debtor or associated
in any interest or kinship up to the fourth degree. Within five (5) working
days from the date of Experts notification of the appointment, the Expert shall
publish the summary of the decision to two widely circulated local daily
newspapers, one in Arabic and the other in English.

The publication shall include an invitation to creditors to submit
their claims and be delivered to the Expert within twenty (20) working
days from the date of publication. The Expert may
request data or information from the Debtor, or any related parties. The Debtor
shall provide the Expert any additional details on creditors or the debt's
amounts. The Expert may request the Court to assist him in the performance of
Experts duties, as required.

Making Measures, and Deciding the Disposition of
Your Application

The Court or Interested Party may take
the necessary Measures to preserve the Debtor's Funds until determination of
the application, or during the settlement of financial obligations. And while
that decision is being pondered, the Court shall decide on the application
without notice or pleading, within a period of five (5) working days from the
date of submission. If the application is accepted the proceedings are open for
settlement, and the Court's decision to accept the Debtor's application for the
settlement of financial obligations shall result in the estoppel or termination
of creditor's right to to proceed against the Debtor's Funds, or the opening of
his Insolvency and liquidation proceedings. Such suspension continues for the
duration of the proceedings. With permission from the Court, any Creditor with
a secured debt, may execute against securities, when the debt is due. Within
ten (10) working days of application submission date, without litigation the
Court can grant permission to verify no collusion between the Debtor and all
secured creditors, has occurred. The Court's decision can be challenged by the
Court of Appeal. The appeal shall not result in the stay of the proceedings for
the settlement of financial obligations. The decision issued in the appeal
shall be considered final. At that point, the Court suspends Debtor's
obligation to apply for his Insolvency and liquidation of his funds. Stay of
execution shall continue during the period of settlement of financial
obligations unless Debtor breaches his obligations as set out in the Plan,
pursuant to the provisions of the Decree. Debtor's application for settlement
of financial obligations shall not result in the maturity of deferred debts on
the date of submission of the application.

Submission and Rejection of Expert Documents, Debt Documents,
Debtors Documents and Report Audits

Creditors with debts not urgent or
secured shall hand over the Expert their debt documents accompanied by the
statements and collaterals, dates of maturity and amount in AED Exchange Rate
on the date of issuance of Court's decision to open the proceedings. Expert may
request clarification of the creditor(s) claims have been submitted, to provide
clarifications on the debt or to complete the documents relating thereto, or to
have any of his claims certified by the creditor's auditor or an independent
auditor. The Expert shall prepare a list of all the Debtor's creditors with the
address, amount, maturity date of the debt, a statement of the holders of the
secured debts, securities prescribed for each of them, the estimated value of
such securities. The Expert shall prepare a report on the Debtor's Funds and
indebtedness and all circumstances relating to his default or Cessation of
Payment and shall submit the same to the Court within twenty (20) working days
of submission of Debt documents. The Expert's report is subjected to audit by
the Court to verify the Debtor's Debt. If the Court deems necessary to complete
the proceedings to settle any financial obligations, it shall issue a decision
instructing the Expert to prepare the Plan. The Court shall rule rejection on
application for settlement of financial obligations, if the Debtor has carried
out any action or refrained from view or concealing or destroying any part of
its funds. Also, that the Debtor has provided false statements on his debts,
rights or funds or the Debtor has ceased to pay any of his debts on the
maturity date for more than fifty (50) consecutive working days, as a result of
inability to pay debts.

The Expert prepares the Plan in cooperation with the Debtor, provides
a copy to creditors, posit a copy with the Court within twenty-two (22) working
days from the date of the Court's decision to instruct the Expert to prepare
the Plan. The Court may authorize any Plan extension period if necessary while
considering the Plan, Debtor and creditors may have one or more meetings, at a
specified place and date, to discuss and vote on the Plan. The first meeting
shall be held within a period not exceeding ten (10) working days from the
date of providing creditors with a copy of the Plan in accordance with clause
(1) of this article. The Expert may send an invitation to attend the meeting
provided for in and by any possible means of communication. Expert may invite
creditors to other meetings during the preparation of the Plan, or postpone the
date of the meeting of creditors, taking into account the number of creditors
known and any other significant circumstances to hold the meeting.

Debtor and creditor shall attend the
meeting in person or through a representative. Implementation of the Plan may
not exceed three years from the date of its approval by the Court which may be
extended subject to the approval of a majority of creditors who own two-thirds
of the debts that have not been paid in accordance with the Plan. The Expert
offers an alternative security to any secured creditor, provided that it is in
the best interest of the Plan's implementation and that the value of the
alternative security is not less than the value of the secured debt. If the
secured creditor does not accept the proposed offer, the Expert may refer the
matter to the Court. The Court may order the replacement of the security if it
is in the best interest of the Plan's implementation and does not prejudice
the interest of the secured creditor.

Voting on the Plan

The Expert shall administer the creditors' meeting and verify during such
meeting the eligibility of those entitled to vote. The creditors' meeting
shall not be valid unless attended by majority exceeding half of the total creditors,
provided that they represent at least two thirds of the total verified Debts. If
Quorum is not met at the first meeting, creditors shall set a new date for a
second meeting within ten (10) working days from the date of the first meeting.
The meeting shall be valid regardless of the number of creditors present, provided
that the attendees represent at least two thirds of the total debts; otherwise, the
Expert shall refer the matter to the Court so as to determine the possibility of
terminating the Debtor's financial settlement proceeding. The right to vote shall be
restricted to creditors whose claims have been accepted by the Court, and the
other creditors may not vote unless authorized by the Court.

Persons not Entitled to Vote Rejection of the Application, Presentation of
the Creditors Plan, and Replacement of Securities

Debtor's spouse, any person financially
supported by the Debtor, relatives of the Debtor up to the second degree are
not allowed any Vote, and the Expert shall administer the creditors' meeting
and verify during such meeting the eligibility of those entitled to vote.

The Court shall rule the completion of
the proceedings for the settlement of financial obligations and the rejection
of the application for settlement of financial obligations as established to
the Court that the Debtor has carried out any action or refrained a view to
concealing or destroying any part of funds. Debtor has provided false
statements on his debts, rights or funds. Debtor has ceased to pay any of his
debts on the maturity date for more than fifty (50) consecutive working days,
as a result of inability to pay.

The Expert shall prepare the Plan in cooperation with the Debtor, provide the
creditors with a copy thereof and deposit a copy with the Court within twenty-two
(22) working days from the date of the Court's decision to instruct the Expert
to prepare the Plan. The Court
may authorize the extension of the Plan.
The Expert shall meet the Debtor and creditors at one or more meetings,
to discuss and vote on the Plan. First meeting within a period not exceeding
ten (10) working days from the date of providing creditors with a copy of the
Plan. The Expert may send the invitation to attend the meeting provided for in
this article by any possible means of communication. The Expert may invite
creditors to other meetings during the preparation of the Plan, or postpone the
date of the meeting of creditors, taking into account the number of creditors
and significant circumstances to hold the meeting, Debtor and creditor shall
attend the meeting in person or through their representative the proposed
period for the implementation of the Plan may not exceed three years from the
date of its approval by the Court. This may be extended subject to the approval
of a majority of creditors who own two-thirds of the debts that have not been
paid in accordance with the Plan.

The Expert may offer an alternative
security to any secured creditor, provided that it is in the best interest of
the Plan's implementation and that the value of the alternative security is not
less than the value of the secured debt, if the secured creditor does not
accept the proposed offer, the Expert may refer the matter to the Court. The
Court may order the replacement of the security if it is in the best interest
of the Plan's implementation and does not prejudice the interest of the secured
creditor.

Voting, Amendment, Approval and Extension of the Plan

The creditors' meeting provided under
this Decree shall not be valid unless, attended by a numerical majority
exceeding half of the total creditors, provided that they represent at least
two thirds of the total verified debts. If the quorum is not met at the first
meeting, the creditors shall be invited to a second meeting within ten (10)
working days from the date of the first meeting.

The meeting shall be valid regardless
of the number of creditors present, provided attendees represent at least two
thirds of the total debts; otherwise, the Expert shall refer the matter to the
Court so as to determine the possibility of terminating the Debtor's financial
settlement proceeding. The Debtor or any creditor may propose any amendments to
the Plan during the meeting, and creditors shall vote at the meeting on any
amendments to the Plan. The Expert may convene a second creditors' meeting to
vote on any proposed amendments. The Plan shall be approved by a majority vote
of the creditors present and whose debts are not less than two thirds of the
value of the debts verified. The Expert shall grant creditors who have not
approved the Plan, abstained from voting or failed to participate, a deadline
not exceeding fifteen (15) working days from the date of ratification of the
Plan, to join such Plan. A creditor who has not attended meetings
scheduled to vote on the Plan shall be deemed as having approved said Plan if
he provided the Expert with his claims and included the same without change in
the Plan before the meeting. If the Debtor agrees with a creditor to grant him
special privileges in exchange for voting on the Plan and in such a manner as
to prejudice the rest of the creditors, the Court may cancel this agreement on
its own initiative or at the request of a creditor. The Court may, at the
request of the Expert, in the absence of the required approval of the Plan,
grant the Debtor a period not exceeding ten (10) working days to set a new date
for voting on the Plan or amend the same so as to present it to creditors. The
Court shall verify that the Plan ensures that all creditors affected receive at
least the amount they would have received if the Debtor's Funds had been
liquidated on the date of voting on the Plan, at the discretion of the Court.
The Court shall issue a decision approving and binding the Plan if all the
conditions set forth in have been complied with to Debtor and on all creditors.
If the Court decides to refuse to approve the Plan, it shall rule to commence
the Insolvency and liquidation proceedings in accordance with the provisions of
Book 3 of this Decree-Law. Within five (5) working days following the decision
of the Court to approve or reject the Plan, the Expert shall notify creditors
of the Court's decision.

Plan Implementation, Sale of Debtor's Property, Amendments, Termination
and Expiration of Settlement Proceedings, Nullity and Effect of the Plan

The Expert shall act as supervisor and
follow up of the Plan for its implementation, shall inform the Court of any
failure to implement it. He may access any data necessary to carry out his
duties. The Expert's appointment shall not affect the Debtor's ability to
conduct his business directly, during the implementation of the Plan for the settlement
of financial obligations, nor shall it relieve him of any legal or contractual
obligations arising from the conduct of his business. The Expert shall sell the
Debtor's property decided to be sold in accordance with the implementation of
the Plan at the best price obtained under the prevailing circumstances in the
market on the date of sale. The proceeds of the sale or any income arising from
the implementation of the Plan shall be deposited in the Court's treasury. The
Expert shall prepare a report on the progress of the implementation of the
Plan, every three (3) months and shall submit a copy to the Court. Any creditor
may obtain a copy of the report. The proceedings for the settlement of
financial obligations shall be confidential. No person who has participated in
the settlement of financial obligations or is aware by virtue of his profession
or function, shall disclose such proceedings to third parties except in
accordance with the legislation in force.

If the Expert finds it necessary to
make amendments to the Plan during its implementation phase and such amendments
would cause a change in the rights or obligations of any party, he shall
request the Court to approve such amendments. Before deciding on the
application, the Court shall notify all creditors who may be affected by such
amendments and any creditors it deems necessary to notify, within five (5)
working days from the date of submission of the Expert's request, in order to
make any observations on the required amendments, and within ten (10) working
days from the date of the notification. The Court may issue a decision
approving the amendment in whole or in part or rejecting the same, taking into
the Decree notification.

The Court may issue a decision approving the amendment in whole or
in part or rejecting the same, taking into
account the interest of creditors.

The Court shall decide to terminate the
Debtor's financial obligations cannot be settled. If the implementation of the
Plan is impossible due to the Debtor's Cessation of Payment of any of his debts
on the maturity date, for more than fifty (50) consecutive working days as a
result of his inability to pay these debts. If the Debtor requests the Court to
terminate the implementation of the Plan before the settlement of the financial
obligations with the creditors. If the period specified for the implementation
of the Plan expires without being able to complete the settlement of the
financial obligations of the Debtor. If the Debtor fails to implement the Plan.
If all the obligations provided for in the Plan are fulfilled, the Court shall,
at the request of the Expert, the Debtor or any of the creditors, issue a
decision on the completion of the implementation of the Plan, and such decision
shall be published in two widely circulated local daily newspapers, one in
Arabic and the other in English. To the
Nullity of the Plan, the Court shall issue a decision to invalidate the approved
Plan if it finds that the Debtor has evaded or attempted to evade the
fulfilment of his obligations, such as concealing or destroying any part of his
funds, or submitting false statements as to his debts, rights, or funds or
disposing of any of his rights or funds. Any Interested Party may file a
nullity claim in accordance with the provisions of clause (1) of this article,
within six (6) months from the date of discovery of the act. In all cases, the
lawsuit shall not be accepted if it is filed after two (2) years from the date
of the Court's decision to approve the Plan. If the Court rules the nullity of
the Plan, any guarantor who guaranteed the implementation of the Plan shall be
discharged. Creditors shall not be obliged to return any amounts received from
the Debtor in return for debts owed thereto before the plan being ruled null.
In any Courts decision to nullify or terminate the Plan in accordance with the
provisions of Decree, the Court shall rule to commence the Insolvency and
liquidation proceedings, in accordance with the provisions of Decree, if it is
proved that this has resulted in the Debtor's failure to pay the debts due on
the date of the decision nullifying or terminating the Plan, for more than
forty (40) consecutive working days due to his inability to pay those debts.

Debtor's Insolvency and Liquidation of his Funds, Appointment of
the Trustee, Publication of the Appointment Decision, Submission and Audit
of Claims, Acceptance of Claims and
Granting of Deadlines

If the Court decides to commence the Insolvency and liquidation proceedings, during
the settlement of the financial obligations, a deposit, additional cash or bank guarantee to cover the
Trustee's fees and expenses is required. If the Court decides to open the
Insolvency and liquidation proceedings, the Court shall appoint a Trustee to
undertake such proceedings. If the Debtor has previously been subject to the
proceedings for the settlement of financial obligations, the Court may appoint
the Expert assigned in accordance with the provisions of this Decree as an
Insolvency Trustee. The Trustee shall, within five (5) working days from the
date of the Court's decision to open the Insolvency and liquidation
proceedings, publish the Court's decision in two widely circulated local daily
newspapers, one publishing in Arabic and the other in English. The Trustee
shall require creditors to submit their claims within twenty (20) working days
from the date of publication of the Court's decision in the two newspapers. Any
claims filed after this date shall be disregarded, unless an excuse accepted by
the Trustee. The Trustee shall undertake the final audit of the creditors'
claims and prepare a report on the Debtor's financial position and submit the
same to the Court within ten (10) working days from the date of the end of the
period specified in clause (1) of this article. The Court may extend such
period for a similar period and for one time. If the value of the claims is
determined in a foreign currency, it shall be converted into the national
currency at the Exchange Rate on the date of the decision to open the
Insolvency proceedings, unless the creditor, and the Debtor agree otherwise.

At the request of the Trustee, the Court may assist him in the performance of his task, including the disbursement
of funds to cover expenses necessary for the conduct of the proceedings. Upon
review of the report submitted by the Trustee, the Court shall determine the
claims it accepts and approves. The Court shall decide on the Debtor's
Insolvency and liquidation of his assets within fifteen (15) days from the date
of receipt of the report of the Trustee. Upon the commencement of the
liquidation of the Debtor's Funds, the Court may, upon the recommendation of
the Trustee and at the request of the Debtor, decide to grant the Debtor a
deadline not exceeding three (3) months, extendable for a similar period to
reach an amicable settlement with his creditors, provided that this does not
prejudice the interest of creditors. Any of the creditors may challenge the Court's decision granting the debtor a
deadline for amicable settlement before the Court of Appeal. The appeal shall
not result in the stay of any proceedings. The decision issued in the appeal shall
be final. If the Court decides to open the Insolvency and liquidation
proceedings, all the Debtor's debts, whether ordinary or secured. If the Court
decides to open the Insolvency and liquidation proceedings, all the Debtor's
debts, whether ordinary or secured or preferential, shall become payable.

Management of Liquidation Proceedings, Request for Information, Right of Recover Funds
Excluded from Liquidation, Sale of Debtor's Residence, Priority of Debtor's
Funds, Distribution of Sale Proceeds, Procedures in Special Cases, and
Liquidation Proceedings Progress

If the decision of the Court to open
Insolvency and liquidation proceedings is issued, the Trustee shall liquidate
all Debtor's Funds, except those that the Debtor may keep in accordance with
the provisions of this Decree. The Debtor shall disclose any property acquired
thereby or devolving thereto for any reason after the Court's decision to open
the Insolvency and liquidation proceedings, and the Trustee shall add the same
to the Debtor's Funds subject to liquidation.

The Trustee shall take legal
jurisdiction to or judicial action
to claim any property in the Debtor's financial liability. The Trustee may
authorize the Debtor to achieve or complete any works or activities with a view
to selling his property at the best possible price, providing (6) months has
not elapsed. The Trustee may extend such period for a term not exceeding two
(2) months, if such continuation serves the interests of the creditors. The
Court shall, at the request of the Debtor or the Trustee, authorize the Debtor
to retain any of its property if the Court considers that such funds are
necessary to enable the Debtor to pursue his occupation, profession or craft.
The Trustee shall sell the Debtor's property in a public auction, with the
approval of the Court and under its supervision and control. The Court may
authorize the Trustee to sell some or all of the Debtor's assets other than by
public auction in accordance with the conditions specified by it. The Trustee
shall use the proceeds of the liquidation of the Debtor's Funds to settle any
claims against the Debtor under the supervision of the Court, and any excess
shall be refunded to the Debtor. The proceeds of sale shall be distributed to
creditors in accordance with the priority specified in this Decree. Where a
creditor has a security over an asset sold, the Trustee shall distribute the
proceeds of sale thereof to creditors, as per their order of preference.

Request for Information,
Right of Recovery, Funds Excluded from Liquidation Proceedings, Sale of the
Debtor's Place of Residence, and Persons Prohibited from Purchasing the
Debtor's Funds

The Trustee may request any person with
information relating to Insolvency and liquidation proceedings, including the
spouse of the current or former Debtor, or any person who holds the property or
funds owned by the Debtor or any person owing funds to the Debtor, to provide
such information. Also, he may instruct such person to determine the funds owed
to the debtor. The Expert shall ensure that the decision to open the
proceedings, includes an invitation to any Interested Person having a right in
any of the Debtor's Funds, to apply for the recovery of movable or immovable
property owned thereby from among the Debtor's Funds.

The application shall be submitted
within two months from the date of publication of the decision and shall state
the type and nature of the specifications of such funds and the nature of the
right attached, The Expert may, upon a
Court order, return the funds in the possession of the Debtor to their owners
after verification of their ownership. The following funds are excluded in the
Debtor's Funds subject to Insolvency or liquidation proceedings: Pension or
social benefit provided to the Debtor, the Debtor's Funds prescribed by the
Court to meet the necessary needs of the Debtor and his dependents. The Court's
decision may be challenged within five (5) working days from the date of its
issuance. The Court shall decide on the objection within five (5) working days
and its decision shall not be subject to challenge in any methods of appeal.
Without prejudice to the legislation in force in the State, the Trustee may
apply to the Court after the judgment of the Debtor's Insolvency and the
liquidation of his funds, seeking the issuance of a decision to sell the house
wherein the Debtor resides, and which may be disposed of by law.

Upon hearing the application, the Court
shall take the following into consideration: The interest of the Debtor's
creditors, if the Debtor has another place suitable for housing., the number of
family members of the Debtor living with him and depending on him. The price
derived from the sale of the Debtor's house will be for the purchase of a house
suitable for the Debtor's housing with his dependents, in accordance with the
prevailing social conditions at the time of this Decree. Any other humanitarian
or social aspects related to the Debtor. Absence of legal or obstacles to the
disposition of the Debtor's place of residence. Persons are prohibited from
purchasing the Debtor's Funds. The Debtor may not directly or through an agent
buy or make an offer to buy all or part of the Debtor's Funds offered for sale.
The following persons may purchase the Debtor's Funds only with the consent of
the Court if it is in the interest of the creditors: The Debtor's spouse, or a
relative, by birth or kinship until the second degree. Any other person who,
during the two years preceding the date of the issuance of the decision to open
the proceedings of Insolvency and liquidation of funds, was a partner,
employee, accountant or agent of the Debtor.

Priority of Debtor's Funds,
Distribution of Sale Proceeds of Debtor's Funds, Special Case Procedures,
Determination of Liquidation Proceedings Progress, Closure of Insolvency and
Liquidation Procedures

If approved by the Court, Trustee
shall, distribute the proceeds of liquidation as per the priority order,
provided that the secured creditors take precedence over other preferential or
ordinary creditors, to the extent of their collateral. The following categories
of debt shall be deemed preferential debts and shall have priority over
ordinary debts; a- Fees and judicial expenses, and the fees and expenses of the
Expert and the Trustee; b- Expenses disbursed by a Court order to serve the
creditors' common interest in the preservation and liquidation of the Debtor's
Funds; c- End-of-service gratuity and wages owed to the Debtor's workers and
employees; d- Alimony and maintenance imposed on the Debtor by an order issued
by a competent court; and e- Amounts due to government agencies.

The Trustee may distribute the
liquidation revenues after each sale or after accumulating the funds resulting
from the total sale operations in accordance with this Decree, The Trustee
shall, after each sale, submit a distribution list to the Court for approval.
The creditor shall receive his share of the distribution proceeds at the place
where the Trustee performs his functions, unless otherwise agreed between the
Trustee and the creditor. The shares of debts that have not been finally
accepted and those which are subject to objection in accordance with the
provisions of this Decree-Law shall be set aside and kept at the Court's
treasury until a final judgment is issued thereon. The secured creditor shall
be paid the sale proceeds of the funds securing its debt; if the value of the
secured assets is insufficient to pay off the entire secured or preferential
debt, the remaining outstanding debt shall be deemed to be the ordinary debt.
The Trustee shall deliver to the Debtor any surplus amounts upon liquidation
after fulfilling all his obligations. If one of the creditors refuses to
receive his debt, is absent or his residence is unknown, the debt shall be
deposited at the Court's treasury and the deposit receipt shall be deemed as a
clearance.

If the Debtor obstructs the Insolvency
and the liquidation proceedings in such a way as to prevent the Trustee from
performing his duties in accordance with the provisions of this Decree-Law, the
Trustee may request the Court to issue an order on a petition to take any
appropriate action against the Debtor. If, after the issuance of the Insolvency
and liquidation judgment, the Court determines that any of the Debtor's Funds
are not disclosed, it may include such funds in the Debtor's Funds under
liquidation. The Trustee shall notify the Court and the Debtor every month of
the progress of the Insolvency and liquidation proceedings.

After the final distribution of the
Debtor's Funds to creditors, the Court shall issue a decision to close all
liquidation procedures; said decision shall include a list of the names of
creditors whose debts are accepted, the amount thereof and the sums paid off.
The Court shall instruct the Trustee to publish that decision in two widely
circulated local daily newspapers, one in Arabic and the other in English. The
Trustee shall return all documents in his possession to the Debtor after the
completion of the proceedings and the performance of his duties. The Court may,
at any time after the issuance of the decision to open the Insolvency
proceedings and at the request of the Debtor or the Trustee, issue a judgment
on the completion of the Insolvency and liquidation proceedings if it finds
that: the reasons for the opening of the Insolvency proceedings have ceased to
exist; the proceeds of the Debtor's Funds are sufficient to pay off the
creditors' rights. All Insolvency effects provided for in this Decree shall be
eliminated accordingly. After the issuance of the decision to close the
Insolvency and liquidation proceedings, any creditor whose debt has been
accepted by the Court and whose debt has not been fully paid, shall have the
right to execute against the Debtor's Funds to obtain the remainder of his
debt. The acceptance of the debt referred to in this Decree shall be deemed as a
final judgment in relation to said execution. If the proceeds of the Debtor's
Funds are insufficient to pay the rights of the creditors, the Court shall
issue a judgment declaring the Insolvency of the Debtor and the end of the
Insolvency and liquidation proceedings.

Taking Measures Against the Debtor, Insolvency of the Estate of
the Deceased Debtor

The Court may take the necessary
measures against the Debtor if he commits or attempts to commit any of the following
acts: 1- Fleeing outside the State to avoid or delay payment of any of its
debts, or to avoid, defer or disable proceedings of his Insolvency or
liquidation of his funds; 2- Disposing of any of his funds with a view to
preventing the Trustee from acquiring or delaying his possession; 3- Concealing
or destroying any of his funds, documents, or other relevant information that
creditors may benefit from; 4- Transferring ownership of any property exceeding
five thousand (5,000) dirhams in his possession, without the approval of the
Trustee; and 5- Failing to appear before the Court after being summoned or
failing to implement its decisions without an acceptable excuse. The
proceedings for the declaration of the Debtor's Insolvency and liquidation of his
funds provided for in this Decree-Law shall apply to the deceased debtor,
taking into account any application for the declaration of the Debtor's
Insolvency shall be announced in the event of the death of the Debtor in his
last domicile without the need to appoint the heirs; The heirs of the insolvent
Debtor shall take his place in the Insolvency and liquidation proceedings to
the extent of the estate. The Trustee shall notify the heirs of the deceased
Debtor to appoint their representative in the Insolvency and liquidation
proceedings. If they do not agree on a representative within ten (10) working
days from the date of their notification, the Court shall, upon the request of
the Trustee, assign any of them or any other person to this effect. The Court may
dismiss the representative of the heirs and appoint another.

Effects of Insolvency,
Debtor's Acts after Opening Proceedings, Stay of Proceedings, Interests and
Securities Provided, Entry into Force of Contracts, Prohibitions and
Registration

The Court's decision to open the
Insolvency and liquidation proceedings shall result in the maturity of the
Debtor's Debts, unless the Court decides otherwise, the Debtor's disposition of
his funds shall not be enforceable, whether with or without compensation,
unless the Court decides otherwise. The Court may order a third party to return
any amount to the Debtor or any other matter it deems appropriate to preserve
the rights of creditors. In all cases, the Court shall hear statements of the
parties to the disposition, before deciding on the validity or nullity of the
disposition. The Debtor's acknowledgment of any debt shall not be enforceable
against his creditors. The Debtor shall be prohibited from managing his business
and disposing of his funds and property. From the date of the opening of the
proceedings, the Debtor may not make any payments in excess of AED 5,000
without the approval of the Trustee. The Debtor shall not be prohibited from
disposing of his funds in respect of the cost of his living or his dependents
as determined by the Court or from paying by set-off to meet mutual obligations
arising prior to the decision to open the Insolvency and liquidation
proceedings, The Debtor may not provide any personal guarantees or collaterals
on any of his funds, except with the prior consent of the Court.

During Insolvency and liquidation
proceedings, no lawsuits or legal or judicial proceedings against the Debtor
may be instituted or pursued in cases other than those authorized by the
Decree. The Court's decision to open Insolvency and liquidation proceedings
shall result in the stay of all judicial execution proceedings against the
Debtor's Funds. Notwithstanding the provisions of this Article, secured or
preferential creditors shall have the right to execute against their collateral
when their debts are due after obtaining the Court's permission. The Court
shall decide on granting the authorization within ten (10) working days from
the date of requesting the authorization. A decision on a request for authorization
does not require memorandum be served or exchanged. The Court's decision to
deny authorization may be appealed before the Court of Appeal. The appeal shall
not result in the stay of the Insolvency and liquidation proceedings. The
decision issued in the appeal shall be final.

The issuance of the decision to open
Insolvency and liquidation proceedings shall result in the Stay of legal or
contractual interest on the Debtor, including accrued interest or compensation
due for late payment; a Stay of any judicial action against any person who has
granted a personal security to the Debtor, or who has transferred his funds to
secure the Debtor's obligations, pending a judgment to liquidate the Debtor's
Funds within the limits of that security. A decision to open Insolvency and
liquidation proceedings shall not result in the termination or rescission of
any contract in force between the Debtor and third parties. The party
contracting with the Debtor shall fulfil its contractual obligations unless the
creditor has pleaded non-execution, before the date of the Court's decision to
open the Insolvency proceedings or requested the rescission of the contract due
to the Debtor's failure to fulfil his obligations, or the Trustee finds that
the Debtor is unable to fulfil his mutual obligations set forth in the
contract. In such case, the Court may, at the request of the Trustee or any
other Interested Person, issue a decision to terminate the contract if
necessary to protect the Debtor's Funds or this is in the interest of all
creditors and does not prejudice the interests of the party contracting with
the Debtor. The Trustee, upon requesting the execution of any contract, shall
ensure that the Debtor has the funds necessary to fulfil his obligations under
that contract and to pay any amount due by the Debtor to the contracting party
under an enforceable contract, unless the contracting party grants the Debtor a
payment term.

Subject to the provisions of this
Decree, the judgment declaring the Debtor's Insolvency and liquidation of his
funds shall result in the preventing the Debtor from obtaining a new loan or
financing for a period of three (3) years from the date of the judgment
declaring his Insolvency; Preventing the Debtor from entering into obligations,
with or without compensation, except as may be necessary to satisfy his
essential needs or those of his dependents for a period of three (3) years from
the date of issuance of the Debtor's Insolvency and liquidation of his funds,
unless the Court authorizes him to do so under an order on a petition submitted
by the Debtor; Recording the names of Debtors against whom a Court decision
declaring their Insolvency and liquidation of funds has been issued in the
special register. The form of the register, the data to be included shall
revert to the competent authority to organize it, and other relevant terms and
conditions shall be determined by a Cabinet decision.

Rehabilitation of Insolvent or Deceased Debtor, Expert and Trustee Replacement, Fees, Penalties

Unless the provisions of this Chapter
provide otherwise, the rights of which the Debtor has been deprived in
accordance with the provisions of this Decree, shall be recovered upon
fulfilment of any of the lapse of three years from the date of completion of
the proceedings for declaring the Debtor's Insolvency and liquidation of his
funds. The lapse of two years from the date of completion of the proceedings
for declaring the Debtor's Insolvency and liquidation of his funds if he has
paid 50% of his debts. The lapse of one year from the date of completion of the
proceedings for declaring the Debtor's Insolvency and liquidation of his funds
if he has paid 75% of the debts.

The Debtor declared insolvent shall be
rehabilitated, even if the period stipulated in this Decree has not lapsed, if
he has paid off all his debts previously accepted by the Court, prior to the
decision to declare the Insolvency and liquidation.

The insolvent Debtor may be
rehabilitated, even if the period provided for in this Decree has not lapsed if
he reaches a settlement with all his creditors and implements it; If he proves
that the creditors have discharged him from all remaining debts after the
Court's decision declaring Insolvency and liquidation.

The insolvent debtor shall be
rehabilitated after his death at the request of the heirs. The periods provided
for in this Decree shall be calculated as of the date of the judgment of
declaration of Insolvency and liquidation. An application for rehabilitation
shall be submitted with the supporting documents to the Court which issued the
Insolvency and liquidation judgment. The Court shall notify creditors whose
debts have been accepted of the application for rehabilitation.

Any creditor whose debts have been
accepted by the Court and whose right has not been paid, may file an objection
for rehabilitation within fifteen (15) working days from the date of its
notification. The objection shall be made by virtue of an application to be
filed with the Court together with the supporting documents. After the
expiration of the period provided for in this summary article, the Court shall
notify the creditors who have filed objections to the application for
rehabilitation of the date of the session set for hearing the application. The
Court shall decide on the application for rehabilitation by a judgment which
may be challenged before the Court of Appeal. If the application for
rehabilitation is rejected, it may not be resubmitted until six months have
elapsed from the date of its rejection.

The Court may not at any time replace
an Expert or a Trustee or appoint additional Experts or Trustees. The Court may
replace the Expert or the Trustee upon the request of the creditor or the
Debtor if it is proved that the continuation of his appointment may be
detrimental to the interests of the creditors or Debtor. Such request shall not
result in the stay of the proceedings. The Expert or the Trustee may request
the Court to relieve him of his duties. The Court may appoint a replacement and
shall specify to the Expert or Trustee who has been relieved the fees for the
services rendered. The appointment of the replacement Expert or Trustee shall
be in the same appointment procedures prescribed by the provisions of this
Decree within five (5) working days from the date of notification of the
appointment decision, the summary of the appointment decision shall be
published in two widely circulated local daily newspapers, one in Arabic and
the other in English. The replacement Expert or Trustee shall cooperate to the
extent necessary to enable the alternative Expert to be interpreted in Arabic
and other in English. The replacement Expert or Trustee shall cooperate to the
extent necessary to enable the alternative Expert or Trustee to assume his
functions. The Court may evaluate the stage of the proceedings at the time of
replacement of the Expert or Trustee and may grant the new Expert or Trustee
sufficient time before completing the proceedings. The Court shall determine
the fees of the Expert or Trustee who has been appointed and said fees shall be
paid from the amounts or bank guarantee deposited in the Court's treasury. If
these amounts or bank guarantee are not sufficient to pay all the fees, the
remaining amounts shall be paid in accordance with the provisions of this
Decree.

The Expert or Trustee shall collect his
fees and expenses incurred from the Debtor's Funds. A payment of such fees and
expenses may be disbursed by a Court decision. If the Debtor's Funds are
insufficient to pay the fees and expenses, the Expert or Trustee may apply to
the Court for payment of his dues from the Court's treasury. Any dues paid from
the Court's treasury shall be recovered in preference to all creditors from the
first amounts entering into the Debtor's Funds. Any Interested Party may file a
grievance before the Court regarding the assessment of the fees and expenses of
the Expert or Trustee. The grievance shall not result in the stay of the
proceedings. The Court shall decide on the grievance within five (5) working
days from the date of its submission. Its decision in this regard shall not be
subject to any methods of appeal. The penalties provided for in this Decree shall
not prejudice any more severe penalty provided for in any other law.

Any creditor who commits any of the
following acts shall be punished by imprisonment and a fine of not less than
ten thousand (10,000) dirhams and not exceeding one hundred thousand (100,000)
dirhams or either of them: If he makes a claim relating to a fictitious or
simulated debt against the Debtor. If he illegally imposes additional debts on
the Debtor. If, at any meetings, he votes on decisions relating to the
settlement of the Debtor's financial obligations knowing that he is legally
prohibited from doing so. If he knowingly concludes with the Debtor, after the
Court's decision to commence the Insolvency and liquidation proceeding, a
special agreement granting him special benefits to the detriment of the rest of
the creditors. A penalty of imprisonment for a period not exceeding two years
and a fine of not less than twenty thousand (20,000) dirhams and not exceeding
sixty thousand (60,000) dirhams or either of them shall be imposed on anyone
who was declared insolvent and it is proved that such insolvency declaration
has caused a loss to his creditors, such as spending large sums in Mudaraba
although not required by his usual business, or in the purchase of services,
goods or materials for personal or domestic use, that are not commensurate with
his distressed financial situation, or in gambling, knowing that his creditors
may be harmed. Paying the debts of one of the creditors to the detriment of to
the remaining creditors within six (6) months prior to the submission of his
application for settlement of his obligations or the declaration of his
Insolvency.

Disposing of his funds in bad faith for
a price less than the market price or resorting to harmful means, to prejudice
creditors with a view to delay the declaration of his Insolvency and
liquidation of his funds. Paying any debts or disposing of any funds knowing
that such acts violate the terms of the Plan.

Final Provisions

If the Court decides to open the
proceedings for the settlement of financial obligations or the Insolvency and
liquidation proceedings, it shall order on its own initiative or at the request
of the Debtor, to stay any criminal lawsuit if it has arisen from a cheque
without sufficient balance issued by the Debtor before requesting the opening
of proceedings for the settlement of financial obligations or the Insolvency
and liquidation proceedings. If the Court decides to stay the criminal case in
accordance with the provisions of clause (1) of this article, the stay shall
continue until the settlement of the financial obligations, or the issuance of
the Court's decision to declare the Insolvency of the Debtor, as the case may
be. The creditor for whom the cheque without sufficient balance has been issued
shall be deemed the Debtor, as the case may be. The creditor for whom the
cheque without sufficient balance has been issued shall be deemed one of the
creditors and his debt becomes part of the total debt of the Debtor. If the
Debtor obtains a Court decision to settle his obligation against the creditor
payee, during any stage of the proceedings for settlement of financial
obligations or the Insolvency and liquidation proceedings, the Debtor may
request the competent court to hear the criminal case in accordance with the
provisions of Article (401) of the Penal Code, to issue a decision to terminate
the criminal case or stay its execution, as the case may be. No judgment or
decision issued by the Court may be challenged during the proceedings for the
settlement of financial obligations or the Insolvency and liquidation
proceedings, except in cases expressly provided for in this Decree. Any
provision that contravenes or contradicts the provisions of this Decree shall
be abrogated. This Decree shall be published in the Official Gazette and shall
come into force three months after its publication. The present Federal
Decree-Law was published in the Official Gazette, Issue no. 661 (Annex 1), p.
53