Bankruptcy & Insolvency

Restructuring, preventive settlement and bankruptcy under the current regime.

Financial distress requires early assessment of the available restructuring options, creditor exposure and risks to the business and its management. We advise companies, shareholders, directors, lenders and trade creditors on preventive settlement, financial restructuring and bankruptcy proceedings.

For debtors, our work includes restructuring proposals, creditor negotiations, court applications and measures to preserve business continuity and assets. And our creditors receive guidance on submitting or challenging claims, enforcing security, participating in restructuring plans and pursuing recovery.

The current UAE framework is governed by Federal Decree-Law No. 51 of 2023 concerning Financial Restructuring and Bankruptcy. The appropriate strategy will depend on the debtor’s legal status, financial position, available security and whether a separate insolvency regime applies.

What we do

• Preventive settlement — Applications to the Bankruptcy Court for preventive settlement, allowing a debtor to propose a plan to creditors while continuing to trade under its own management, together with the protections that attach during the process.
• Restructuring — Court-supervised restructuring, plan preparation, creditor classification and voting, and implementation once a plan is approved.
• Bankruptcy proceedings — Debtor and creditor petitions, appointment and supervision of trustees, realisation of assets, and distribution to creditors.
• Director and manager liability — Advice on directors’ duties as insolvency approaches, and defence of claims seeking to hold directors and managers personally liable where trading continued too long.
• Creditor representation — Proof of debt, participation in creditors’ committees, challenges to plans that unfairly prejudice a class, and objections to trustee decisions.
• Security and enforcement — Enforcement of mortgages, pledges and registered security, and realistic advice on the priority a secured creditor will actually enjoy in a formal process.
• Out-of-court workouts — Negotiated standstills, rescheduling and refinancing with lenders and trade creditors, which remain the quickest route wherever the creditor group is small enough to manage.
• Asset recovery — Investigation and recovery of assets, and challenges to transactions at undervalue, preferences and transfers made during the suspect period.
• Cross-border insolvency — Coordination with foreign proceedings, recognition questions, and the interaction between the onshore, DIFC and ADGM insolvency regimes.

Who we act for

Companies in financial distress and their boards, banks and secured lenders, trade creditors and suppliers, trustees and restructuring professionals, and investors in distressed assets.

Common questions

When must a company file for bankruptcy?

The law sets cessation-of-payment triggers and a period within which the position must be addressed. Missing them is one of the routes to personal liability for directors.

Can directors be held personally liable?

Yes, in defined circumstances, including where business was continued after insolvency in a way that increased losses. This is the most under-appreciated risk in UAE distress situations.

What is preventive settlement?

A court-supervised process allowing a debtor that has not yet ceased payments to agree a plan with its creditors while retaining management of the business.

I am owed money by a company in bankruptcy. What should I do?

Register your claim within the prescribed period, establish whether you hold security or retention of title, and take a view on joining the committee. Late claims are usually bad claims.