Bankruptcy & Insolvency

Bankruptcy and Insolvency Lawyers in Dubai for Restructuring and Creditor Claims

AY Advocates advises companies, directors, shareholders, lenders and creditors on financial distress, restructuring and bankruptcy matters in the UAE. An insolvency lawyer can assess a company's financial position, creditor claims, available security and the legal options before financial difficulties become harder to manage.

For businesses subject to the federal bankruptcy regime, preventive settlement, restructuring and bankruptcy are governed by Federal Decree-Law No. 51 of 2023 and its Executive Regulation under Cabinet Resolution No. 94 of 2024. The same regime does not apply in the same way to every UAE entity. Certain businesses established in financial free zones and some regulated financial institutions may be subject to separate insolvency or resolution frameworks, so the applicable legal regime should be identified at an early stage.

Temporary rules may also affect the ordinary bankruptcy procedures during a declared Emergency Financial Crisis. Where those provisions apply, matters such as creditor applications, trustee appointments, procedural deadlines and access to rescue financing may be treated differently from the ordinary regime.

For companies in financial difficulty, we advise on restructuring proposals, negotiations with lenders and trade creditors, formal applications handled through the bankruptcy process, and proceedings before the Bankruptcy Court. We also advise on measures intended to preserve viable business operations where the legal requirements are met. For creditors, we assist with claims, security rights, participation in formal proceedings and available recovery options.

Preventive settlement and restructuring may provide alternatives to immediate bankruptcy. In preventive settlement, the debtor generally continues managing the business in the ordinary course, subject to the powers and supervision of the Bankruptcy Court. Transactions outside the ordinary course may require court approval under the applicable bankruptcy rules.

Restructuring involves closer supervision and may include the appointment of a trustee. The debtor may continue managing the business under the trustee's supervision, although the Bankruptcy Court may restrict or remove management powers where the circumstances justify doing so. A restructuring plan is subject to creditor voting and Bankruptcy Court consideration and ratification in accordance with the statutory requirements. In certain circumstances provided by law, the Bankruptcy Court may ratify a plan even where it has not received the required creditor approval.

A bankruptcy and insolvency lawyer may also become involved where concerns arise about earlier transactions, payments to particular creditors, asset transfers or the conduct of directors and managers. These matters must be assessed against the facts and applicable law. Financial difficulty or insolvency does not, by itself, make every director or manager personally responsible for the company's debts.

What We Do

• Preventive settlement: Handling applications for preventive settlement, preparation of settlement plans, creditor engagement and the Bankruptcy Court process. The debtor generally remains responsible for managing the business in the ordinary course, subject to applicable court supervision and approval requirements.
• Restructuring: Managing court-supervised restructuring matters, including restructuring plans, creditor classification, voting, Bankruptcy Court ratification and implementation of an approved plan.
• Bankruptcy proceedings: Representing debtors and eligible creditors in bankruptcy applications, trustee-related matters, asset realisation, creditor claims and distributions under the applicable priority rules.
• Director and manager liability: Assessing the duties and potential personal exposure of directors and managers where liability is alleged under bankruptcy legislation or other applicable UAE laws.
• Creditor representation: Preparing and submitting proofs of debt, reviewing creditor classification and voting rights, participating in creditors' committees where applicable, and handling challenges or objections concerning restructuring plans and trustee decisions.
• Security and enforcement: Assisting secured creditors with mortgages, pledges and other forms of security, including enforcement options, priority issues and the treatment of secured claims during preventive settlement, restructuring or bankruptcy proceedings.
• Out-of-court workouts: Negotiating standstill arrangements, debt rescheduling, refinancing and other consensual arrangements between businesses, lenders and trade creditors outside formal bankruptcy proceedings.
• Asset recovery: Reviewing transactions, payments and asset transfers that may be subject to challenge or recovery under applicable insolvency rules, together with measures to preserve or recover assets.
• Cross-border insolvency: Handling matters involving foreign insolvency proceedings, overseas assets, recognition and enforcement issues, and the interaction between the federal bankruptcy regime and separate insolvency frameworks that may apply in the DIFC, ADGM or other relevant jurisdictions.

Who We Act For

AY Advocates acts for companies experiencing financial difficulty, directors and shareholders, banks and secured lenders, trade creditors and suppliers, restructuring professionals and investors considering distressed businesses or assets.

We advise both debtors and creditors, subject to applicable conflict requirements, from early restructuring discussions and creditor negotiations through preventive settlement, restructuring and bankruptcy proceedings where required.

Frequently Asked Questions

What is preventive settlement under UAE bankruptcy law?

Preventive settlement is a formal procedure available to eligible debtors seeking to address financial difficulties through a court-supervised settlement plan.

The debtor generally continues managing the business in the ordinary course, subject to the powers and supervision of the Bankruptcy Court. Actions outside the ordinary course of business may require court approval under the applicable bankruptcy rules.

Can a creditor apply for restructuring or bankruptcy proceedings against a company?

Yes, subject to the statutory requirements and any temporary rules that may apply. Under the ordinary federal bankruptcy regime, qualifying creditors may apply to initiate proceedings where the requirements concerning the debt, notice, supporting documents and applicable monetary thresholds are satisfied.

Temporary Emergency Financial Crisis provisions can affect this position for qualifying debtors. Where those provisions apply, consideration of creditor-initiated applications may be postponed for the duration of the relevant emergency regime. The circumstances affecting the debtor and the rules in force at the time should therefore be checked before proceedings are started.

Are directors personally liable if their company becomes insolvent?

No. A company becoming insolvent does not automatically make its directors or managers personally responsible for the company's debts.

Personal liability may arise in circumstances specified by bankruptcy legislation or other applicable laws, depending on the conduct involved and the facts of the case. The actions of each director or manager should therefore be assessed individually.

Does the same bankruptcy law apply to every company in the UAE?

No. Federal Decree-Law No. 51 of 2023 does not apply in the same way to every entity operating in the UAE.

Companies established in jurisdictions such as the DIFC or ADGM may be subject to separate insolvency regimes, while certain regulated financial institutions can also be subject to specialised resolution frameworks. The company's legal form, place of incorporation and regulatory status should be established before determining the appropriate procedure.

What should I look for when comparing the best insolvency law firms?

Look for experience relevant to the specific financial or legal problem involved, whether that concerns restructuring, creditor claims, secured lending, director exposure, asset recovery or formal bankruptcy proceedings.

An insolvency law firm should also be able to identify the applicable insolvency regime, assess the strength and priority of creditor claims and consider realistic recovery or restructuring options before recommending formal action.

Can a secured creditor enforce its security if bankruptcy proceedings have started?

It depends on the type of security, the procedure that has been commenced and the orders or restrictions that apply to the particular case. Preventive settlement, restructuring and bankruptcy proceedings can affect when and how security may be enforced.

A secured creditor should review its security documents, priority position and the applicable bankruptcy procedure before taking enforcement action. The existence of security does not mean that enforcement can proceed without considering restrictions imposed by the bankruptcy regime or orders of the Bankruptcy Court.