The Dubai Commercial Court has ordered the dissolution and liquidation of a land transport company after finding that its capital had been fully eroded and its liabilities had surged to nearly Dh34 million, leaving it unable to continue operations.
The ruling followed a lawsuit filed by one of the company’s partners, who argued that mounting losses had effectively paralyzed the business.
The company had already ceased operations, with its financial obligations far exceeding the capital stated in its founding contract.
To assess the firm’s financial condition, the court appointed an independent accounting expert to examine its records, assets, and liabilities.
The expert concluded that the company was no longer active, had no real estate, movable assets, or cash reserves, and had accumulated losses that completely wiped out its capital. Its financial position, the report said, was deeply negative.
After reviewing the findings in open court, and in the absence of the other defendants, the court ruled that the company could not realistically resume business. It ordered the firm to be dissolved and placed into liquidation, citing provisions of the UAE Commercial Companies Law that permit judicial dissolution when losses make continuation impossible.
A liquidator has been appointed to manage the winding-up process, which includes registering the court decision in the commercial register, taking custody of company books and records, inventorying any remaining rights or obligations, and notifying creditors to submit claims within the legally prescribed period. Public notices of the liquidation will be published in two local newspapers, one in Arabic.
Any movable assets discovered during the process will be sold at public auction, with proceeds distributed to creditors according to legal priority. The liquidator is required to submit periodic reports to the court until the company is formally struck off the commercial register upon completion of the liquidation.
