Law on Bankruptcy
Business bankruptcy in the UAE is governed by Federal Decree-Law No. 51 of 2023 Promulgating the Financial and Bankruptcy Law. The law provides a legal framework to help distressed companies in the UAE to avoid bankruptcy and liquidation through different mechanisms which include and Cabinet Resolution No. 94 of 2024 Concerning the Executive Regulations of the Financial Restructuring and Bankruptcy Law:
- consensual out-of-court financial restructuring
- composition procedures
- financial restructuring
- the potential to secure new loans under terms set by the law
- conversion to declaration of bankruptcy and liquidation of the debtor’s assets.
The law does not apply to natural individuals. It applies to:
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companies governed by the Commercial Companies Law
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any natural person having the capacity of a trader
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licensed civil companies carrying out professional activities.
The law aims to increase business stability in the UAE and investors’ confidence in the UAE market.
Article 3 of the law mentions that this law does not apply to:
- companies that are fully or partly owned by the federal or local government, where their own laws or governing documents include special rules for settlement or bankruptcy
- companies and businesses established in free zones that follow their own special rules for settlement or bankruptcy
- banks, financial institutions, and insurance companies licensed by the Central Bank, as they are governed by separate laws for settlement or bankruptcy
- personal debts, such as those taken for family or everyday use, including buying goods or services, or purchasing a home for personal or family residence.
Updated on:
06 May 2026
