Given the persistence of fraud, investing in the stock market is never without the potential for complete financial ruin. Many cases exist of people who invest in a firm only to find out it has gone out of business or is being liquidated. In addition, it seems that many Real Estate Buyers or individuals/businesses dealing with firms under the UAE are hesitant to commence legal actions against a company that has gone to or is in liquidation.
Concerned parties sometimes wonder whether litigation or arbitration, as may be called for in the Agreement between the parties, will authorize such a method of recovery of the debt owed and whether the method must be performed to be added to the list of Creditors.
Commercial Company Law has the solution to this conundrum (CCL). Claims for the recovery of debts from a firm that is in liquidation may be submitted to the court or arbitrated as provided for in the CCL. Florida liquidation marketplace is different from insolvency in that legal proceedings might begin or be prolonged (Article 691 of the UAE Commercial Code). Upon dissolution, the firm is regarded to be in liquidation immediately under the UAE Commercial Companies Law No. 8 of 1984 ("CCL"). It will keep its corporate identity during the liquidation process to the degree necessary to complete the necessary paperwork. When a corporation is dissolved, the managers and board of directors no longer have any power. During the liquidation process, the company's institution will remain in place but will be restricted to handling only those matters that fall outside of the purview of the liquidators. Unless otherwise specified in the document appointing the liquidator, the liquidator is responsible for carrying out all necessary liquidation functions, including representing the company before the courts of law, settling the company's debts, and selling the company's movable assets or real estate.
Thus, the firm preserves its corporate body during the liquidation process and the liquidators represent the company under liquidation before the court of law when the corporation is dissolved and liquidated.
Therefore, the corporate body does not die out before the liquidation is finalized and closed, just the representatives of the firm change. There is no assignment or transfer of any arrangement between the company and the liquidators that would cause the latter to be joined as a party to any litigation or arbitration.
Resolving a debt recovery dispute according to the terms agreed upon by the parties is a commonplace provision in contractual agreements. Such a strategy would be used in addition to the creditor's other existing options for debt recovery under the Law.
This means that a creditor can choose to pursue debt recovery using the CCL's established procedures, or they can opt to pursue arbitration or legal action instead. Any other reading would be an unconstitutional infringement on the freedom to go to court, as guaranteed by the Constitution. At any time, creditors can seek legal counsel and pursue suitable legal action against the indebted business.
If the debtor maintains that the creditor either should not have or did not properly file a formal claim with the Company's liquidators, the creditor will be responsible for paying the debtor's legal fees and expenses in any subsequent arbitration or court proceedings. However, there are specific rules that liquidators must follow. The goal of liquidation, according to UAE Companies Law No. 8 of 1984, is to verify that the company's business has been concluded properly. It entails the following:
All Company Contracts Must Be Completed, Transferred, or Terminated Before the Dissolution of the Company. All Litigation Must Be Ended. All Assets Must Be Sold. All Money Owed to the Company Must Be Collected. All Surplus Funds Must Be Distributed to Creditors and the Return of Share Capital Must Be Returned to Shareholders.
Creditors who may have claims against the Company in liquidation will be contacted formally and under legal requirements to assess those claims and be invited to present them in the liquidation. The liquidators shall make all reasonable provisions to pay all claims and obligations, including all contingent, conditional, or unmatured contractual claims known to it at the time of liquidation, unless the liquidators have failed to formally notify creditors of the liquidation in 2 local newspapers. Also, the debtor corporation must set aside an amount that is anticipated to be adequate to pay off any claims that may be filed.
Since arbitration or litigation proceedings are required to preserve the claims of the creditors and the repayment of the same by the liquidators to the creditors, the liquidation proceedings do not affect the rights and claims that the creditors may have under the Agreement(s) with the debtor company.