Dubai Court Nullifies Dh97m Land Transfer Over Asset-Shielding Scheme

A Dubai civil court has annulled the transfer of a land parcel valued at more than Dh97 million, finding that a 2015 transaction in which a company gifted over 33 million square feet of land to a related entity was legally void.

The ruling followed a lawsuit filed by a bank, which argued that the insolvent company had shifted the property to avoid paying debts established by final court judgments.

The claim was brought against two companies: the first, owner of the land and declared bankrupt in 2024, and the second, the entity that received the land as a “gift.” Court-appointed bankruptcy trustees uncovered the transfer during asset tracing, noting that both companies shared ownership links, management, and premises.

No evidence surfaced to show that any genuine financial consideration had been paid -- an essential requirement for validating such a transfer. The recipient company maintained that the land had been mortgaged at the time and that it had paid significant sums to remove the lien. However, a court-appointed expert found no documentation to support the claim that an actual purchase price had been settled.

The expert also highlighted that the two firms were structurally and administratively intertwined. Upon instruction, the expert examined the ownership structure, the value of the property, the timing of the debts, and whether real consideration had been exchanged.

The findings were clear: the bankrupt company indirectly owned 99 per cent of the recipient entity through intermediary firms, and both companies operated under unified senior management. There was also no evidence that the recipient company had paid a legitimate market price for the land.

Records showed that the land was later incorporated into a development project registered in the name of the original owner as a real estate developer.

After reviewing the expert report and case documents, the court concluded that the transfer lacked legal substance and amounted to an attempt to shield assets from creditors. It declared the transaction invalid and ordered that the land be returned to the bankrupt estate, ensuring it forms part of the assets available to satisfy creditor claims.

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