Economic liquidations frequently present chances to purchase company assets at competitive prices in the United Arab Emirates’ (UAE) dynamic economic climate. For investors, business owners, and companies wishing to diversify or increase their holdings, purchasing assets from a defunct company can be a wise strategic choice.
However, managing the asset purchase and insolvency procedures in the United Arab Emirates necessitates a thorough comprehension of the legal framework and procedure. This blog is a guide for all those planning on buying assets from a liquidated company in UAE –
Understanding Company Liquidation in the UAE
In the United Arab Emirates, corporate liquidation is the official procedure for shutting down a business, disposing of its assets, paying off debts and liabilities, and finally deregistering the enterprise. When a company is solvent and wants to stop operating, its shareholders may choose to liquidate it voluntarily. If a corporation is insolvent and unable to pay its debts, a court judgment may require liquidation.
Selecting a licensed liquidator specializing in liquidation in Dubai, notifying creditors through the publication of liquidation notices, paying off outstanding debts, such as government and employee fees, visa clearances, and allocating any leftover assets to shareholders are all steps in the voluntary liquidation process. Physical fixed assets, merchandise, contracts, intellectual property, and other business holdings may all be dissolved when company is liquidated.
Why Should You Buy Assets from an Insolvent Company?
Buying assets from a company that has gone out of business can have a number of benefits. Here’s why you should buy an asset from someone undergoing company liquidation in the UAE:
- Reduced Prices: In order to swiftly resolve creditors’ claims, liquidated assets are frequently sold for less than their market value.
- Fast Access: Purchasing a company might help you enter new markets or grow your firm quickly. Whether in Dubai or Abu Dhabi, it helps with the easy acquisition of assets.
- Variety of Assets: When acquiring insolvent business assets, both material and immaterial assets, including machinery, stock, licenses, and trademarks, are available to buyers.
- Possible Turnkey Solutions: Occasionally, purchasers purchase a full operational setup, complete with staff employment and client contractual rules.
Due diligence is essential, nevertheless, because liquidated assets can have financial, legal, or regulatory burdens.
Steps Of Buying Assets from Company Liquidation in UAE
If you plan on buying assets from a liquidated company in UAE, here are some steps to follow –
Step 1: Find Possibilities and Perform Research
The first step in purchasing assets from a company that has gone through a liquidation is to find liquidation sales. In order to give creditors and possible buyers transparency, notices of liquidation are published in government gazettes and local media as mandated by law.
Prospective purchasers should perform extensive due diligence, which includes examining the liquidator’s asset listings, evaluating the assets’ state, confirming the voluntary legal title of the assets, and being aware of any liens or encumbrances. Examining contracts, legal titles, and regulatory permissions is necessary to prevent acquiring assets that are prohibited or under dispute.
Step 2: Communicate with the Liquidator
The liquidator is the designated person in charge of overseeing asset sales in a UAE liquidation. The liquidator, who is in charge of asset valuation, marketing, and sales in accordance with UAE regulations, must speak with buyers directly. They can also be called an insolvency practitioner whom you must appoint to make the process seamless.
In order to maximize compensation for creditor entities, the liquidator may ensure that assets are liquidated transparently, frequently through direct negotiation or public auction. Buyers should make clear any warranties or liabilities related to the assets, as well as the terms of the sale and the terms of payment. When you appoint a liquidator, you can relax knowing that a professional is handling the technicalities for you while you’re buying assets of the company that is being liquidated.
Step 3: Sale Agreement and Negotiation
Following the identification of an asset of interest, the buyer and liquidator negotiate conditions. The purchase price, payment schedule, ownership transfer, audit, liabilities, and asset specifications must all be covered in full in the selling agreement. In certain cases, asset transfers may need the approval of regulatory or free zone authorities.
Step 4: Transfer and Payment
The buyer completes payment in accordance with the conditions of the sale agreement after signing it. The liquidator updates title deeds, registers, and notifies the appropriate authorities to simplify asset transfers to the bank.
Buyers may require further approvals or registrations under UAE intellectual property or commercial regulations for specific assets, such as trademarks or licenses.
A Few Legal Considerations for Corporate Buyers
Before the signing of a closure and winding-up of a company, here are some legal considerations you must consider.
- Clear Title: Verify that the assets have undisputable, transferable, and clear legal ownership.
- Liability Risks: Find out if buying assets entails taking on any inherited obligations.
- Regulatory Compliance: Verify if the asset transfer conforms with free zone or sector-specific laws.
- Employee Transfer: Recognize the UAE labor law’s transfer provisions if the acquisition involves employees.
- VAT and Tax: Take into account how VAT may affect asset sales and make sure that all invoices and tax records are accurate.
- Dispute Settlement: The selling agreement should outline the dispute settlement procedures and the applicable law, which is typically UAE law.
Final Takeaway
If you are someone buying assets from a liquidated company in UAE, you can experience new business growth in the region. Remember, you can ensure a smooth acquisition by engaging with appropriate liquidators, understanding the legal considerations, and planning thoroughly. You might need the services of professionals with buying assets from a liquidated company.
Xpert Advisory in the UAE can help you with easy company liquidation and complete closure. Speak with our experts and discover how we can help you!
FAQs
What Obligations Do Buyers Need to Follow To Buy Assets from a Liquidated Company?
It is imperative for buyers to perform comprehensive due diligence on the assets, confirm a clear title, and comprehend any associated obligations or encumbrances. Buyers should work with the liquidator to ensure a transparent transaction and adhere to all legal procedures for asset transfers.
When Buying Liquidated Assets, Can Buyers Inherit Any Obligations Or Debts?
Unless specifically agreed upon or permitted by law, purchasing assets from a liquidated corporation usually does not transfer the company’s liabilities to the buyer. To prevent unintentionally taking on contingent obligations, buyers must carefully confirm with legal counsel.
Does The Sale Of Liquidation Assets Require The Consent Or Agreement Of The Buyer?
Although the liquidator can sell assets, they must adhere to legal requirements, which may include getting the consent of creditors or partners, depending on the kind of liquidation. To verify the legitimacy of the sale, buyers should make sure all necessary approvals and paperwork are in order.
