UAE Bankruptcy law : modernised procedures and financial governance

Effective from 1 May 2024, Federal DecreeLaw No. 51 of 2023 on Financial Reorganisation and Bankruptcy overhauls the UAE’s insolvency landscape. Based on the source “UAE Bankruptcy Law: A New Era in Financial and Legal Governance” (STA Law Firm, Jan 2025), this article outlines the logic, actors, thresholds and pathways, plus practical steps for debtors, creditors and investors.

Oversight and registry

The reform clarifies roles for supervisory entities (including the Central Bank and the Securities and Commodities Authority) where regulated entities are involved. A central bankruptcy register is established to track filings, actions and judicial outcomes under a dedicated unit. Access is regulated (purpose based requests; Ministry of Justice approval), balancing transparency and confidentiality.

Access thresholds and filing

Monetary thresholds focus court resources on significant cases and differ across debtor initiated and creditor initiated routes, with additional rules for secured creditors. A guarantee deposit (percentage of debts/assets) may be required at opening to cover initial costs, with waivers available in hardship.

Small debtors and simplified track

The law introduces a simplified track for small debtors (asset thresholds), enabling streamlined preventive settlement, restructuring or bankruptcy. The goal is to reduce procedural burden and preserve entrepreneurial continuity while protecting creditor rights.

Tools and critical path

• Preventive settlement: for liquidity stress short of cessation; court supervised negotiations with a stay on actions and access to restructuring finance where needed.
• Restructuring: class based plan; potential confirmation despite dissent if fairness tests are met (no creditor worse off than in liquidation; respect of priority).
• Liquidation: orderly winddown with officeholder; distributions per statutory waterfall.

Market implications

The clarified framework enhances predictability for regulated actors (banks, insurers, listed companies). Transparency, disclosure and sectoral supervision reassure lenders and investors, notably for complex restructurings and distressed M&A.

Balancing interests

Raised entry thresholds refocus courts on material cases, while small cases benefit from the simplified track. Creditors gain through registry access, collateral clarity and class voting. Debtors gain clarity (rights, process, timelines) and tools (financing, plan, stay).

Good practice

• Early warning: cash runway/covenants dashboards; litigation and security mapping; trigger points.
• Reliable data: financials, plan, assumptions, goingconcern tests and liquidation alternatives.
• Creditor dialogue: standstills, committees, regular updates, mediation where helpful.
• Governance: decision traceability, ad hoc committees, disclosure discipline.
• Legal: secure key contracts/security packages; anticipate clawback; map litigation risk.

Digital track and outlook

A secure online platform is being rolled out to interface with the register, streamlining filings and communications. Capacity building for practitioners and crossborder cooperation should further strengthen outcomes.

The 2024 law provides a clear, tool rich framework for financial distress: adapted procedures, reinforced oversight and safeguards for stakeholders. Early detection, robust data and a negotiated strategy remain critical to preserving value and reaching balanced solutions.

Our lawyers, who are experts in business law, are available to answer all your questions and provide advice. We offer face-to-face meetings or videoconferencing. You can make an appointment directly online at https://www.agn-avocats.fr/.

AGN AVOCATS – Business Law
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