Dubai Court declares bankruptcy of a jewelry company

The Dubai Civil Court recently declared the bankruptcy of a jewelry company in the emirate due to its failure to pay its commercial debts on due dates, the disruption of its financial position, and the destabilization of its credit.

The Attorney General and Head of the Civil Prosecution in Dubai, Counselor Abdullah Kulaib, said: “The creditor, the plaintiff, presented proof that the debtor (the defendant company) had stopped paying its commercial debt, and he asked the Civil Prosecution to file a bankruptcy case in the competent court and provide its reasons for doing so. He requested the inclusion of another company and its director as a partner.

According to the Commercial Transactions Law, Kleib explained that “every creditor with a commercial debt must prove that the debtor has stopped paying his debt and request bankruptcy to recover his rights.”

In the details, the first prosecutor, Tariq Al-Naqbi, said that the owner of the plaintiff company filed a lawsuit against two companies and a manager as a partner, because one of the two companies dealt with him commercially in the field of gold and jewelry, and wrote two checks to him in the amount of eight million and 645 thousand dirhams.

He continued that the two checks bounced on their due date, and it turned out that the subsidiaries of the two companies were closed and all the partners fled, which led to the first company stopping paying its debts. It also turned out that other creditors did not recover their money from that company.

He said that according to Article 652 of the same law, the court may order that the necessary measures be taken to preserve or manage the debtor’s funds until the bankruptcy case is decided, and it may assign an expert to conduct an investigation into the debtor’s financial condition and the reasons for his stopping payment and submit a report thereon.

He pointed out that the prosecution stated its opinion in the reasons it presented to the court, which were that the first defendant company was hopeless and had no hope of resuming its commercial activity.

Al-Naqbi added that the first defendant had stopped paying its debts since 2010, so the prosecution decided to accept the case against the first company declaring its bankruptcy, because of its commercial dealings with it, but it decided to reject the case against the other company and the manager himself because he did not deal with the plaintiff personally, but rather commercially. This resulted in the first company being declared bankrupt only, in application of Article 808: “If a request is made to declare the company bankrupt, the court may order the bankruptcy of every person who In her name, he carried out businesses on his own account and disposed of her money as if it were his own money.

He continued, “The ruling also resulted in the collection of all the company’s funds and its account to distribute them to all creditors. Based on the ruling, the court appointed the company’s bankruptcy trustee, who is the judicial receiver.”

Courts page prepared by: Bashayer Al-Mutairi