Business bankruptcy in the UAE is governed by Federal Law by Decree No. 9 of 2016 on Bankruptcy (available in Arabic) which came into force on December 2016. The law provides a legal framework to help distressed companies in the UAE to avoid bankruptcy and liquidation through different mechanisms which include:

• 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:

• companies governed by the Commercial Companies Decree Law
• companies which are not established under the Commercial Companies Law and which are wholly or partly owned by the federal or local government, stipulating that Federal Law by Decree No. 9 of 2016 on Bankruptcy applies
• companies and establishments in the free zones that are subject to the provisions of Federal Law No. 8 of 2004 on Financial Free Zones and which are not governed by particular provisions regulating protective composition procedures, financial restructuring and/or bankruptcy
• any individual who is a trader as defined in the Commercial Transactions Law (Available in Arabic only).
• licensed civil companies carrying out professional activities.

The law aims to increase business stability in the UAE and investors’ confidence in the UAE market.

Amendments on Bankruptcy Law:

• Federal Decree Law No. 21 of 2020 amending some provisions of the Bankruptcy Law (Available in Arabic)
• Federal Decree Law No. 23 of 2019 amending some provisions of the Bankruptcy Law (Available in Arabic).