x Abu Dhabi, UAETuesday 23 January 2018

Case highlights the need for a bankruptcy law

Take our poll: A high-profile case demonstrates how a modern, well-thought-out bankruptcy law will improve life for debtors and creditors alike.

It's hard to defend the actions of failed entrepreneur Simon Ford, who fled the country three years ago after the collapse of his Dubai-based business Blue Banana. Short-lived, the venture provided vouchers that could be exchanged for adventure "experiences" such as hot-air ballooning and skydiving. Yesterday's news that Mr Ford has started an online venture in the UK, and is involved with two other companies, only serves to rub salt into the wounds of his many creditors, suppliers and former employees here in the UAE.

The moral and ethical issues surrounding the swift departure of Mr Ford and his family can be debated endlessly. At the time, he vowed to repay "every last dirham" of the Dh1 million he owes - although inquiries by The National have failed to establish whether this process has begun.

But at least one thing Mr Ford said when he fled was clearly right: some of the blame for the fallout from his company's failure must rest with the absence of structured bankruptcy laws in this country. Elsewhere in the world, there are legal mechanisms that can help save failing enterprises through the restructuring of their debts or, in the worst-case scenario, ensuring that whatever assets are left when a business goes bust are distributed in a fair manner.

The good news is that a draft law introduced in January will go some way towards finding a better solution for businesses that are on the brink, sometimes through no fault of their own. If enacted it would also help protect future creditors who invest in firms that go belly up. At last report, the fine print was still being sorted out and, unfortunately, did not include changes to the counterproductive law that imprisons individuals who bounce cheques or default on loan repayments. Clearly, a jail inmate has no way of earning his or her way out of debt. We can only hope this issue is addressed in the final legislation.

Any new law that addresses insolvency is welcome, albeit too late to help those creditors who may never see a fil from their involvement with Mr Ford, who is now running an "online identity creation" company called Punch ID and selling hairdressing products over the internet.

Creditors should find some solace in the fact that the moves for reform are real, even as they ponder how their fortunes may have been different if Mr Ford had stayed in Dubai and had been able to go through a formal, legal bankruptcy process.