Federal Decree-Law No. 51 of 2023, with Cabinet Resolution No. 94 of 2024 as its regulations, gives distressed UAE companies, traders and licensed civil companies several routes: out-of-court restructuring, composition, court restructuring and, as a last resort, bankruptcy and liquidation. It does not apply to private individuals.
Who does the law apply to?
Companies under the Commercial Companies Law, natural persons who are traders, and licensed civil companies; not individuals with personal debts (UAE Government portal).
What procedures are available?
Out-of-court consensual restructuring, composition procedures, financial restructuring, new financing on statutory terms, and conversion to bankruptcy and liquidation (UAE Government portal).
“The law does not apply to natural individuals.”
What changed from the old law?
Stays now last until a plan is ratified, a rejected plan does not automatically mean bankruptcy, appeals run 30 days, and directors can be liable for acts in the two years before payments stopped (Gulf Business).
What should directors do early?
Get a reliable cash-flow forecast and statement of affairs, talk to key creditors, and take advice before payments stop. Early action keeps more options open.
Which route fits which situation
| Situation | Likely route |
|---|---|
| Short-term cash squeeze, viable business, cooperative creditors | Out-of-court consensual restructuring |
| Viable business, creditors need court protection to agree | Composition or court-supervised restructuring |
| Business cannot continue | Bankruptcy and liquidation |
Procedures listed by the UAE Government portal.
Warning signs directors should act on
- Salaries or WPS payments slipping.
- Paying one creditor by delaying another.
- Covenant breaches or bounced cheques.
- Tax liabilities left unpaid to fund operations.
Acting early keeps more options open and limits personal exposure for directors (Gulf Business).
Frequently asked questions
When did the law take effect?
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It came fully into force on 1 May 2024.
Is bankruptcy the same as liquidation?
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No. Voluntary liquidation is for solvent companies; bankruptcy is a court process for insolvent ones.
Can directors be personally liable?
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Yes, for certain acts in the two years before payments stopped.
Can a company keep trading during restructuring?
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Often yes, under the supervision the court sets.
Sources
- UAE law on bankruptcy (Federal Decree-Law No. 51 of 2023 and Cabinet Resolution No. 94 of 2024) — The official portal of the UAE Government (u.ae). Checked 17 October 2026.
- 7 key provisions of the UAE's new bankruptcy law (Federal Decree-Law No. 51 of 2023) — Gulf Business. Checked 17 October 2026.