Bankruptcy

Bankruptcy is the court-supervised regime for businesses that cannot pay their debts, governed in the UAE by the bankruptcy law (currently Federal Decree-Law No. 51 of 2023), which created a specialised bankruptcy court and procedures ranging from preventive settlement to restructuring to full liquidation of the debtor's assets. Directors and managers have duties around the insolvency zone: trading on recklessly, preferring some creditors, or concealing assets can trigger personal liability and, in serious cases, criminal exposure. Creditors interact with the regime by filing claims, voting on restructuring plans, and challenging suspect pre-bankruptcy transactions. The law aims to shift UAE practice from stigma and flight toward managed rescue — giving honest businesses breathing space while protecting creditors collectively. It matters to any company in distress and to anyone owed money by one. You meet it when a counterparty stops paying and files for protection, or when advising a struggling company on whether and when it must file.