From My Legal Desk
“Too often, CEOs of profitable companies feel they will always be able to refund maturing obligations, however large these are. In 2008-2009,many managements learned how perilous that mindset can be.,” opined Warren Buffett.
How true! And this is what we see in the market around us today.
In the perspective, when it comes to debts, or nonperformance of a fiscal contract, or failure to comply with a pecuniary arrangement in a commercial transaction, the first thing that comes to the mind of any person is, knocking the doors of the court. However, pre-litigation, or even sans litigation, a creditor company can opt for ‘Extra Judicial ‘procedure to recover the debts.
UAE’s legal system follows a civil law pattern. In UAE, we have the laws that encompass the rights of the creditor as well as the debtor, and the laws are well regulated which has laid down the procedure for recovery. The primary sources of civil law are the Federal Codes promulgated under the Constitution of UAE. The laws that govern corporate debt include the Commercial Transactions Law, Civil Transactions Law, the Bankruptcy Law, the Companies Law, and the Civil Procedure Law.
A creditor may use, one or more of the options to recover the debt. The option being 1. Approach a Debt Collection Agency 2. Approach a Corporate Legal firm 3. Approach a Law firm / Lawyer.
1. What you can expect from a Debt Collection Agency: The debt collection agency will use legitimate modes of debt recovery , may issue a demand letter , or several demand letters as the case may need, make follow up calls / visits , and if all means to achieve the end of recovery fails, then the matter is snowballed to a lawyer to whom they are attached or a law firm with whom they have partnered.
2. What you can expect from a Corporate Legal Firm: A Corporate Legal Firm will study the case, render a legal opinion whether the case needs immediate filing of a suit or in their discretion depending on the case use their inhouse Legal team to issue a primary demand letter, and if the debtor fails to comply, then move on to issue a final legal notice by a qualified inhouse legal professional and then initiate recovery. Further legitimate modes of recovery are followed as a protocol, under the relevant laws, until recovery. Should the protocol entirely or partially fail, then the matter is transferred to the lawyer attached to file a petition in the competent court.
3. What you can expect from a Law Firm / Lawyer : Electively depending on the case the lawyer will issue a legal notice and if the debtor fails to respond within the stipulated period , he will proceed to file a suit for recovery before the competent court. Or in the alternative directly proceed to file a suit depending upon the case constraints & requirements.
Regarding professional fees for recovery of dues, it depends upon the complexity of the case, the age of the debt, the factor of recoverability, the procedure adopted, and the legitimate channel opted.
What is the right option for you? Well, that depends upon your need, and how swiftly you need your debt to be reconciled., and the channel you adopt that can revive your delinquent account. The professionals in the field, with their expertise understand the pros and cons of each legitimate mode of recovery and would advise you accordingly. Thereby in corporate debt recovery with several ramifications in its process, what is needed is, the right move in the right direction, which effectively facilitates judicious debt recovery.
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To be continued/-
Henrietta Newton Martin
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©Henrietta Newton Martin 2019
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# HENRIETTA NEWTON MARTIN
From Henrietta Newton Martin's Legal Desk 