A business can have different kinds of creditors: secured and unsecured. Both types of creditors have rights when a company goes under company liquidation in UAE. For secured creditors, they enjoy a defined hierarchy in terms of repayment. This means they are allowed in getting repaid before other creditor groups. There’s a general assumption that a company’s unsecured creditors only have a few rights when a company is liquidated. But, unsecured creditors actually have the right in influencing proceedings. Unsecured creditors are also entitled in being fully informed with regards to a company’s liquidation.

1. What Creditors Should Know
About UAE Company
Liquidation
https://farahatco.com/blog/what-creditors-should-know-about-uae-company-
liquidation/

2. Int.
 A business can have different kinds of creditors: secured and unsecured. Both types
of creditors have rights when a company goes under company liquidation in UAE.
For secured creditors, they enjoy a defined hierarchy in terms of repayment. This
means they are allowed in getting repaid before other creditor groups.
 There’s a general assumption that a company’s unsecured creditors only have a few
rights when a company is liquidated. But, unsecured creditors actually have the
right in influencing proceedings. Unsecured creditors are also entitled in being fully
informed with regards to a company’s liquidation.

3. Company Liquidation in UAE: Rights of
secured Creditors
 Secured creditors of a company, as mentioned earlier, lead the hierarchy in terms
of repayment as soon as the liquidation costs have been covered. Creditors with
fixed charges for the assets of a company are entitled in receiving funds from the
sale of the assets in the process of company liquidation.
 A fixed charge is often granted by a banking institution or a lender that’s asset-
based with a fixed charge. A fixed charge is often for hard assets like plant and
machinery, vehicles, land, and property. Intangible assets such as patents and
intellectual property can also have a fixed charge. Creditors, secured and
unsecured, both have rights in challenging the remuneration of an appointed
liquidator in UAE if they have proof that it’s too high. This can be done through a
court application.

4. Company Liquidation in UAE: Rights of
unsecured Creditors
 Hold meetings for creditors – unsecured creditors of a company undergoing company liquidation
in UAE can request for an in-person meeting for creditors. Ten percent of the creditors (by number
or value) or ten different creditors are able to make a request for a meeting to be held. Notices and
proposals may be sent to all parties involved via electronic means.
 Appointment of a company liquidator – unsecured creditors can use their right in voting on the
liquidator that will handle the voluntary liquidation of a company. Although shareholders may have
already made an appointment, unsecured creditors have the option in choosing a different
liquidator, unless the court appoints the professional.
 Form a liquidation committee – regardless of whether they’re voluntary or mandatory liquidation
proceedings, a company’s unsecured creditors have rights in forming a liquidation committee for
creditors. This often consists of more than two members with roles of overseeing the entire process
of liquidation in behalf of all unsecured creditors of a company. One of the initial duties of a
liquidation committee is agreeing the fee of the office-holder. The committee can also monitor the
actions of the company liquidator during the whole procedure. Committee members don’t receive
any fee or payment for taking on their role; however, they’re entitled in claiming reasonable
traveling expenses.

5. General rights of creditors of companies in
UAE
 Receiving regular reports on updates of the liquidation proceedings from the appointed
company liquidator. This includes disposal of property. Final and interim liquidation
accounts should be made available for viewing by creditors.
 Requesting a creditors’ meeting with liquidator in UAE at any phase of the liquidation
proceedings. The meeting dates can be agreed mutually in advance. If a creditor wishes
for a creditors’ meeting even when it hasn’t been pre-arranged, he/she has the right in
doing so.
 When a company undergoing liquidation is found to be in possession of assets that
belong to creditors, the creditors can provide proof of ownership. The creditors can
make a claim via the liquidator for the assets’ reimbursement or return.
 For unsecured creditors, they can claim interests for debts that are acquired by a
company under liquidation. Creditors should have stated the intention in charging
interests with the initial agreements or provided notices as a reminder that interests for
debts are to become due.

6. How money is distributed during Company
Liquidation in UAE
 If there are still company funds that are left over following the payment of the costs of
the liquidator and secured creditors including company employees, company liquidator
has to pay the unsecured creditors with a dividend.
 In general, the funds of the company are to be distributed in this order:
 Expenses for the company liquidation including the fee of the appointed liquidator
 Outstanding wages of employees
 Outstanding leave of absence of employees
 Retrenchment pay of employees
 Unsecured creditors

7. Company Liquidation in Dubai UAE
 Creditors of a company undergoing company liquidation in UAE can also propose
for the appointment of a reviewing liquidator and inspect financial records of the
company and the liquidator. In UAE, all concerned parties to a company liquidation
are to be abide by the local laws and regulations in carrying out the process.
 For more information regarding company liquidation and how we can help you
with the process, talk to the seasoned company liquidators of Farahat & Co today!

8. Contact Us
 WhatsApp Only: +971526922588
 Mobile: +971553701232
 WhatsApp / Call: +971554828368
 Telephone: +97142500251
 Email: sales@farahatco.com