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Restructuring / InsolvencyAnswered

My UAE company can't pay its debts — what are my options before creditors act?

Asked by Anonymous·Jun 10, 2026·1 answers
Sales collapsed this year and my small Dubai company now owes suppliers and the bank more than it can realistically pay. I keep hearing there are formal procedures for companies in financial difficulty, but I don't understand the difference between restructuring and bankruptcy, or whether I could be personally responsible as the owner and signatory.

This answer is AI-generated by LEXAI. It is general legal information, not legal advice — verify anything you act on with a licensed UAE lawyer. How LEXAI uses AI

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AI-generated answer

Jun 11, 2026
You have formal options, and using them early is what protects you. UAE bankruptcy law offers a spectrum: a preventive settlement process for debtors in difficulty but not yet hopeless, where you stay in control of the business while agreeing a court-supervised deal with creditors; a restructuring process for deeper distress, run with greater court and trustee involvement; and bankruptcy liquidation when rescue is not viable. The key difference is timing and control — restructuring preserves the company and your management role where possible, while bankruptcy winds it up and distributes what remains. On personal exposure: an LLC's debts are in principle the company's, but three things commonly pierce that comfort in practice — personal guarantees you signed for the bank, security cheques signed in your own name, and conduct that worsened the position after you knew the company could not pay. Continuing to take credit you know cannot be repaid is the pattern that creates personal liability. So act now: stop deepening the hole, gather a realistic statement of assets and debts, open honest conversations with the bank and key suppliers, and take advice on which procedure fits. An insolvency lawyer can assess your guarantee and cheque exposure before creditors move first.
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