3 May 2024
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Significant Step Forward: New UAE Bankruptcy Law

To The Point

The New Bankruptcy Law (Federal Law Decree No 51 of 2023) came into effect in UAE on 1 May 2024, replacing the previous law (Federal Decree-Law No 9 of 2016). While maintaining much of the old law's structure, it introduces significant changes for creditors and debtors, including the recognition of both natural and legal persons as 'debtors'. The law retains emergency financial crisis provisions from the old law and is expected to impact restructuring and insolvency cases in the UAE.


On 1 May 2024, Federal Law Decree No 51 of 2023 concerning Financial Restructuring and Bankruptcy (New Bankruptcy Law) came into effect in the UAE. The New Bankruptcy Law repeals the previous bankruptcy law, Federal Decree-Law No 9 of 2016 (Old Bankruptcy Law) in all respects. Much of the architecture of the OId Bankruptcy Law remains broadly in place. Procedures for preventative settlement, financial restructuring and bankruptcy all remain intact, for example, and the New Bankruptcy Law reinforces certain other provisions introduced by virtue of amendments to the Old Bankruptcy Law. The emergency financial crisis provisions which were enacted into the Old Bankruptcy Law are retained, for example, and we now have specific recognition that a "debtor" under the New Bankruptcy Law includes both natural and legal persons. The New Bankruptcy Law introduces other significant changes for both creditors and debtors. We consider in this article certain of those changes and their likely effect on restructuring and insolvency cases in the UAE moving forward.

New Bankruptcy Courts
Abolishment of FRC, introduction of Bankruptcy Unit and Financial Restructuring and Bankruptcy Unit
Insolvency test
Recognition of UAE bankruptcy proceedings in other jurisdictions
Trustee powers, supervision and creditor driven tools
Changes to preventative composition procedure
Antecedent transactions


There is no doubt there has been significant investment into, and focus on, the infrastructure of the bankruptcy regime in the UAE by the introduction of the New Bankruptcy Law. Having established Bankruptcy Courts, a Bankruptcy Department and a Financial Restructuring and Bankruptcy Unit is a significant step forward and brings the UAE's regulations  in line with international best practice. Progress is also being made in respect of the recognition of UAE bankruptcy processes in other jurisdictions even without the express adoption of the UNCITRAL Model Law under the New Bankruptcy Law. Creditors may feel that improvements could have been made in other areas however it’s clear the "rescue" framework as originally adopted under the Old Bankruptcy Law was intended to be retained. The Executive Regulations which support the New Bankruptcy Law will provide more detail and will be published in due course.


To the Point 

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