Court Cancels Fraudulent Dh24M Land Transfer Under UAE Bankruptcy Law, Orders Auction to Repay Creditors

The Dubai Commercial Court has declared invalid a land transfer carried out more than a decade ago by a real estate development company, ruling that the transaction was intended to defraud creditors. Relying on provisions of the UAE Bankruptcy Law and the Civil Transactions Law, the court empowered the trustee to reclaim the property -- worth over Dh24 million -- for auction, with proceeds to be distributed among creditors.

 

The dispute originated in January 2025, when the court declared the company bankrupt under Federal Decree-Law No. 9 of 2016 on Bankruptcy, following years of inactivity and failure to renew its trade licence. Creditors included both real estate firms and individual developers. A trustee was appointed under Article 68 of the Bankruptcy Law to inventory and recover company assets.

 

Suspicious Property Dealings

The trustee’s inquiry found that the company’s only significant asset, a Dubai land plot, had been transferred in 2014 as a “donation” to an individual, who later resold it in 2018. Citing Article 168 of the Bankruptcy Law, the trustee challenged the transfers on the grounds that they were intended to harm creditors by stripping the company of its last remaining asset.

 

Court Rejects Defence Claims

Defence lawyers argued that the case was time-barred since the transfer was registered with the Dubai Land Department more than ten years ago. They also claimed the transferee had personally settled the company’s liabilities. The court rejected both arguments, clarifying that under Article 168(2) of the Bankruptcy Law, the statute of limitations starts only when creditors become aware of the fraudulent act.

 

The court also referred to Article 282 of the Civil Transactions Law, which provides that any act causing unlawful harm to another -- such as fraudulent asset transfers -- requires compensation.

 

Judicial Emphasis on Creditor Protection

The court concluded that the donation and subsequent transfer were void under UAE law, as they were carried out with the intent and effect of depriving creditors of repayment.

The ruling underscores the judiciary’s commitment to safeguarding creditor rights in line with the Bankruptcy Law and Civil Code. It reinforces the trustee’s statutory powers to challenge fraudulent acts and strengthens investor confidence in Dubai’s legal framework.

 

The trustee will now proceed with listing the land for public auction, with proceeds directed toward satisfying approved creditor claims.

 

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