TL;DR
- A new Bankruptcy Court is being launched, based at
Abu Dhabi Federal Court of First Instance. - It will handle all disputes under the UAE’s updated bankruptcy laws.
- Specialized judges and financial experts will manage complex insolvency and restructuring cases.
The UAE has introduced a specialized Bankruptcy Court to handle financial distress and insolvency cases. The decision, issued by Minister of Justice, is part of broader efforts to strengthen the country’s legal system and support economic stability.By setting up a central court in Abu Dhabi and allowing for additional branches across other emirates, this move aims to streamline how bankruptcy cases are handled. It ensures businesses and individuals facing financial challenges have a clear, structured legal path, whether that’s restructuring debt, preventing liquidation, or settling disputes.This decision aligns with Federal Decree-Law No. (51) of 2023, which lays out the country’s financial restructuring and bankruptcy rules.“This step aims to develop the judicial structure that supports the national economy and enhance the effectiveness of the justice system in dealing with cases of financial distress and bankruptcy,” said the Ministry of Justice, in an official post.
Bankruptcy Court Explained: How It Works and What to Expect
1. Based in Abu Dhabi, With Flexibility to ExpandThe main Bankruptcy Court will be based at the Abu Dhabi Federal Court of First Instance. But it’s not limited to the capital. The authorities can open branches in other emirates if needed. No matter where they’re located, these courts will have the same power to handle cases.2. Handles All Kinds of Bankruptcy DisputesThe court will deal with everything that falls under the UAE’s updated bankruptcy law, officially known as Federal Decree-Law No. 51 of 2023. That includes:
- Financial restructuring requests
- Preventive settlement plans
- Bankruptcy filings
- Any disputes, objections, or complaints tied to these processes
Basically, if it has to do with financial distress or insolvency, this court is where it goes.3. Run by Judges Who Know the JobThis won’t be a general court. It’s staffed with specialized judges, including a chief judge who holds a rank no lower than that of an appeals judge. These judges are appointed by the Federal Judicial Council, and they’ll be supported by a dedicated team that handles all the paperwork, case registration, and official notifications.4. Expert Help for Complex CasesThe court isn’t working alone. It can bring in financial experts and consultants to assist on cases. Their job?
- Manage the debtor’s assets and operations
- Meet with creditors
- Apply urgent measures when needed
- Help move things along faster
This makes it easier to deal with complicated cases that need both legal judgment and financial know-how.
The Bigger Picture: Why This Matters
Bankruptcy laws are often misunderstood or seen as a last resort. But in reality, a solid bankruptcy framework can keep businesses afloat, protect jobs, and preserve creditor rights, all without shutting a company down.With the new court in place, the UAE is:
- Making it easier for companies and individuals to manage debt legally.
- Providing alternatives to liquidation, like out-of-court settlements or structured repayment plans.
- Improving investor confidence by ensuring transparent and fair processes.
Understanding UAE Bankruptcy Law
The UAE’s bankruptcy law applies to registered companies that fall under the Commercial Companies Law, as well as traders and licensed professionals operating through civil companies. Before reaching the stage of liquidation, the law offers several legal options. These include out-of-court financial restructuring, negotiated settlements with creditors (also known as composition procedures), and formal restructuring supervised by the court. In some cases, the court may allow the debtor to secure new loans to help keep the business running. If none of these solutions work, the final step is declaring bankruptcy and proceeding with the liquidation of assets.
FAQ
- 1. Who can file for bankruptcy in the UAE?
Companies, traders, and licensed professionals facing financial distress can file under the law.
- 2. Will the Bankruptcy Court handle both companies and individuals?
Yes. As long as they fall under the categories outlined in the law, both businesses and individuals can file.
- 3. How does this help businesses?
It gives them a structured way to deal with debt, avoid liquidation, and possibly continue operating through financial restructuring or settlements.
