Debt recovery
Bankruptcy and insolvency in the UAE: a practical guide
How the UAE restructuring and bankruptcy framework works for businesses, individuals and their creditors, and why early action matters.
Over the past decade the UAE has reformed its insolvency framework to give businesses and individuals in financial difficulty a structured way to restructure, settle with creditors or, where necessary, liquidate in an orderly way.
The framework for businesses
Federal Decree-Law No. 51 of 2023 on Financial Restructuring and Bankruptcy, which replaced Federal Law No. 9 of 2016, sets out the procedures available to companies and traders. In broad terms they are:
- Restructuring: a court-supervised process that allows a business in difficulty to agree a plan with its creditors while it continues to trade.
- Bankruptcy with restructuring: where a debtor has stopped paying, or is about to, it may seek a restructuring plan within bankruptcy proceedings.
- Bankruptcy with liquidation: where restructuring is not feasible or the plan is not approved, the court may order the debtor's assets to be realised and distributed to creditors.
Creditors can also apply
An ordinary creditor, or a group of creditors, may apply to open proceedings where the debt is unconditional, undisputed and payable, meets the minimum amount set by the Executive Regulations, and the debtor has not taken the necessary measures to repay within 30 days of a written notice (Art. 16(1)). Secured creditors may apply only where the value of their security falls short of the debt by at least the amount set in the Executive Regulations (Art. 16(2)).
Personal insolvency
Federal Decree-Law No. 19 of 2019 on Insolvency provides a separate framework for individuals and non-trading debtors. It allows a debtor to propose a settlement plan to creditors under court supervision or, if that is not possible, to enter insolvency and liquidation.
Practical points
- Act early. Delay narrows the options for debtors and weakens the position of unsecured creditors.
- Keep records in order. Reconciled accounts and documented claims matter on both sides.
- Talk to creditors. Open communication can often lead to an agreed arrangement outside the formal process.
This article summarises the framework in general terms. Thresholds and procedures are set by the law and its Executive Regulations, which should be checked for the facts of each case. General information only, not legal advice.
