Just two insolvency cases at DIFC Courts

Despite the global financial crisis, only two bankruptcy cases were brought to Dubai International Financial Centre (DIFC) Courts. No major insolvency or restructuring cases were recorded, senior officials informed Emirates Business.

"There were no major insolvency or restructuring cases. But two cases were documented at the DIFC Courts," Dr Nasser Saidi, Chief Economist of DIFC, said on the sidelines of a press conference held yesterday at the DIFC to announce that Insol International, the global body of insolvency professionals, is scheduled to hold its regional conference in Dubai in March.

Mark Beer, Registrar of DIFC Courts, confirmed that two insolvency or winding up cases had come before the courts.

The cases were filed by Orion Holding Overseas, a subsidiary of Shuaa Capital, which ceased trading last year; and Forsyth Partners Global Distributors, which had its licence withdrawn for failing to meet applicable regulatory capital requirements in 2007.

"Orion's is the second case, the first involved Forsyth and there's a third case seeking enforcement action," Beer said. Yesterday, Orion's winding up petition case was heard in the DIFC Court of First Instance by Justice Sir John Chadwick.

Regarding other liquidation matters, Beer said: "There are many that won't come to the courts. They opt to pay off their creditors and close the matter. The courts will know only when they either become insolvent or are formally wound up under court orders or have a third party appointed to do that."

He added: "Solvent winding up is when a company has enough assets to pay off creditors but does not generate enough business to continue operations."

Beer said the two cases involved insolvent winding up, where the companies were unable to meet their commitments to creditors.

"Companies in such a financial position come to the court and request for the appointment of an insolvency practitioner. This practitioner helps the company to recover whatever finances it can from its assets and then pay off its creditors," he said.

The DIFC insolvency framework, which is being adopted in the Dubai World restructuring process, has already been tested, Saidi said.

"If they need restructuring, we'll be able to implement this as per international norms to ensure that creditors and preferred creditors such as employees get paid," Beer added.

The Dubai Financial Services Authority (DFSA) said that no major company at the centre had gone bankrupt and that the two insolvency cases before the DIFC Courts were filed prior to the financial crisis.

"There have been no major bankruptcies at DIFC. Some of the licences were withdrawn voluntarily but that was happening even before the global financial crisis began," a senior executive from DFSA, the centre's regulator, said.

More than 850 firms are registered at the DIFC while the DFSA supervises and regulates a total of 326 entities. These include 249 authorised firms, 58 ancillary service providers, 17 registered auditors and two market entities.

Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.

Follow Emirates 24|7 on Google News.