Dubai’s ruler Sheikh Mohammed bin Rashid al-Maktoum issued a new insolvency law on Tuesday for companies operating in the Dubai International Financial Centre (DIFC), the largest financial hub in the Middle East, Africa and South Asia.
The new law, due to come into effect in August, has been issued following the collapse of Dubai-based private equity firm Abraaj, which had a DIFC-regulated entity Abraaj Capital.
The firm that had been the Middle East and North Africa’s biggest buyout fund unravelled after a row with some investors over the use of money in a $1 billion healthcare fund.
The new law introduces a “new debtor in possession bankruptcy regime” for debtors that have filed for bankruptcy but still hold assets, according to a statement on the Dubai’s ruler official website.
Abraaj, its founder Arif Naqvi and a former executive are being investigated by the U.S. Securities and Exchange Commission (SEC) on U.S. charges that they defrauded investors, including the Bill & Melinda Gates Foundation. [nL1N21T1QZ]
The Dubai Financial Services Authority (DFSA) said in April it was in touch with the SEC and had been investigating Abraaj Capital Ltd, an entity of the collapsed firm, over a range of matters but has not specified what they are. [nL5N21X4A7]
Reporting by Tuqa Khalid; Editing by Davide Barbuscia and Edmund Blair