A debtor's own bankruptcy petition must include the statutory documents, or the court must justify accepting it

The principle

Under Article 73 of the Bankruptcy Law (Federal Decree-Law No. 9 of 2016), a debtor applying to open bankruptcy proceedings must state the reasons and attach the listed documents, including a memorandum on its economic and financial position, assets and employees; certified copies of its licence and commercial registration; its commercial books or financial statements for the previous year; a report with twelve-month cash-flow and profit forecasts, lists of known creditors and debtors and a detailed statement of its assets; and a proposed trustee. Missing items must be explained. Under Article 79, the court declares the application inadmissible if the documents are missing or incomplete without justification, unless it accepts it on conditions that protect creditors, and it must explain that choice.

The case and the decision

A trader who owned several sole establishments and held stakes in other companies applied to the Fujairah federal court to open bankruptcy proceedings in respect of himself, to appoint a named expert as trustee and to stay all claims, judicial proceedings and enforcement against his assets. He said that he had stopped paying debts exceeding AED 100,000 for more than thirty days, that several judgments had been given against him and that his assets could not cover his debts. After an expert reported, the first-instance court declared the application inadmissible. The Fujairah Court of Appeal reversed. It found that he was a trader, that his commercial debts had reached AED 16,777,316 under judgments and enforcement orders, that he had stopped paying for more than thirty days and that his financial position was disturbed; it accepted the application, appointed an accountant registered with the Ministry of Justice as trustee and stayed claims and enforcement against his assets until the bankruptcy was confirmed. The appellant, which opposed the application, appealed in cassation. The Federal Supreme Court set out the documents that Article 73 of the 2016 Bankruptcy Law requires with a debtor's application and the rule in Article 79 that an application lacking them, or with incomplete documents and no justification, is inadmissible unless the court accepts it on conditions it considers appropriate in the creditors' interest. The Court of Appeal had relied only on the expert's description of the debtor's finances, without examining whether the application met the requirements of Article 73, which are essential conditions, and without explaining on what basis it accepted an application whose documents and information were incomplete or whether the gaps were justified. The judgment was quashed for insufficient reasoning and error of law, and the case was remitted.

Laws applied

In the court’s words

“تقضي المحكمة بعدم قبول الطلب إذا لم يتم تقديم الوثائق والبيانات المنصوص عليها في المادتين 73، 74 من المرسوم أو إذا قدمت ناقصة دون مسوغ”

Short quotation from the judgment as published by the court. The full judgment is on the court’s official service.

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