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The Civil Court in Dubai declared a Gulf national insolvent after it was proved that he was unable to pay outstanding debts to three creditors including banks and individuals, totaling Dhs4,375,000.
This came after he filed a lawsuit to declare his insolvency due to not possessing any funds or assets to dispose of to settle the debts.
The court appointed an insolvency trustee to audit the debts and prepare a report on the debtor’s financial situation.
The trustee affirmed in his report that the debtor had obtained a housing loan from one of the banks amounting to Dhs4,074,000 and that he owed Dhs229,000 in spousal expenses, in addition to Dhs72,000 for child support, all of which were debts he could not pay anything towards.
The insolvency trustee also indicated that the debtor had no funds and had not declared any funds or rights held by third parties, which meant he was unable to pay his debts and therefore unable to proceed with the liquidation of his assets and their distribution to creditors.
Legal consultant Dr Alaa Nasr, the legal representative of the debtor, stated that the insolvency law aims to help the debtor fulfill his debts by appointing an expert to assist him in inventorying and auditing debts and liquidating assets, during the period from the date of accepting the application and initiating proceedings until before the judgment declaring insolvency, if necessary.
Nasr pointed out that the law grants the debtor multiple advantages, including protecting him from the initiation or continuation of any lawsuits, halting all judicial enforcement procedures on his assets, and restricting the right of creditors to dispose of his assets guaranteeing their debts without obtaining court permission.
The court may grant the debtor a grace period to reach an amicable settlement with his creditors, but on the condition that the debtor demonstrates honesty and transparency, Nasr added.
