Lawyers in Dubai for Corporate Insolvency & Business Restructuring

A company can own valuable assets and still be unable to meet its next payroll or supplier payment. Another business may have cash today but face liabilities that make continued trading unrealistic. These situations require an assessment of the company’s finances, legal obligations and prospects before deciding whether negotiations, restructuring or bankruptcy offer the appropriate response.

Lawyers in Dubai advising on corporate insolvency should connect the legal procedure with a workable commercial plan. For management, that means understanding what decisions remain permissible and what records must be preserved. For creditors, it means identifying the correct debtor, proving the claim and assessing realistic recovery rather than relying only on the amount outstanding.

Begin with the company and the applicable law

Obtain the trade licence, incorporation documents, ownership structure and financing agreements. Confirm which entity owes each debt. A familiar trading name may cover several companies, and a parent company does not necessarily owe a subsidiary’s contractual obligations.

For businesses within its scope, Federal Decree Law No. 51 of 2023 provides the Financial Restructuring and Bankruptcy Law, effective from 1 May 2024. Article 3 covers companies subject to the Commercial Companies Law, traders and licensed professional civil companies, with specified exclusions. Cabinet Resolution No. 94 of 2024 supplies the Executive Regulations.

The DIFC and ADGM have separate insolvency frameworks. Their procedures should not be treated as interchangeable with the federal process. Personal and family debts also require separate analysis; the federal personal insolvency legislation is distinct from the corporate regime. Establish the relevant framework before choosing an application or predicting its effects.

DIFC Courts reported 1,509 cases filed across all divisions in 2025, a 43% year-on-year increase. Its account of case activity included insolvency among the issues considered across the Court of First Instance divisions. The total is not an insolvency-only count and does not describe the separate federal bankruptcy caseload.

Build a reliable picture of the financial position

Prepare current management accounts, a schedule of liabilities and a cash forecast showing when money is expected to arrive and when payments fall due. Separate confirmed receipts from hoped for sales or refinancing. Explain overdue receivables, disputed invoices and any significant dependence on one customer.

The asset schedule should show ownership, location, estimated realisable value and existing security. A property valuation does not necessarily show how much cash a sale would produce after a mortgage, transaction costs and sale delays.

List employee obligations, leases, guarantees, tax matters and pending proceedings. Record contingent liabilities even where their amount remains uncertain. Incomplete information can undermine both a proposed rescue and a creditor’s assessment of whether to support it.

Compare negotiations with a formal procedure

An agreed payment extension may help where the difficulty is temporary and the necessary creditors cooperate. Any agreement should identify the amounts, revised dates, information obligations and consequences of default. A private arrangement should not be assumed to bind a creditor who has not joined it.

The federal framework offers preventive settlement and restructuring under statutory conditions. Preventive settlement can allow an eligible debtor to continue ordinary business while proposing an arrangement. Activities outside the normal course require the court’s approval under Article 58. Restructuring under Article 87 requires a viable business and satisfaction of the relevant conditions.

The useful question is whether the business can perform the proposal. A repayment schedule based on unsupported revenue expectations merely postpones the same problem. Identify how operations, financing or asset ownership will change enough to support the proposed payments.

Check the entry requirements before filing

Different applications have different requirements. Under Article 5 of the Executive Regulations, the ordinary debt threshold for a legal person’s own application is AED 500,000. For an ordinary creditor or group of ordinary creditors, Article 6 generally sets a threshold of AED 1 million. Regulated debtors and secured creditor applications have additional or different rules.

Article 16 of the law also requires the relevant ordinary creditor debt to be unconditional, undisputed and payable, together with the prescribed payment notice and 30 day period. Insolvency proceedings should not be treated as a substitute for proving a disputed contractual debt.

Filing can itself affect the debtor’s powers. Article 15 includes restrictions on disposal of property when the debtor submits a bankruptcy application. Management should obtain advice on the proposed filing and immediate operational consequences before authorising transactions.

Understand what a suspension of claims actually covers

There is no universal rule that announcing financial difficulty stops all creditors. Under Article 59, a decision initiating preventive settlement triggers a three month suspension of claims, with extensions subject to the statutory limit of six months. Restructuring has its own suspension provisions under Articles 92 and 93.

Obtain the relevant order and identify its start date, duration and scope. Consider the particular creditor, security, proceedings and any available exception or permission. Suppliers should also establish how new supplies and payment obligations will be handled during the process.

A group company’s difficulties should not be assumed to produce the same protection for every affiliated entity. Guarantees, assets abroad and proceedings elsewhere need separate examination.

Make the rescue proposal usable for creditors

A proposal should explain how creditors will be treated, where payment will come from and what happens if the assumptions fail. Provide a comparison with the likely outcome if the business cannot continue. Creditors need enough information to assess value, timing and risk.

Suppose a distributor expects an asset sale to fund repayments while retaining its profitable supply business. The proposal should address the sale timetable, secured lender’s position, operating cash needs and the consequences of a lower sale price. Each assumption should connect to evidence.

New financing also requires care. Article 62 permits financing arrangements within the statutory framework, including possible priority over existing ordinary debts under its conditions. It does not allow management to promise any ranking it chooses. Article 94 applies relevant financing provisions to restructuring.

Protect a creditor claim through accurate documentation

Keep contracts, purchase orders, delivery records, invoices, statements and correspondence acknowledging or disputing the debt. Identify principal, interest and costs separately, with the legal or contractual basis for each amount.

Follow the notices and directions issued in the proceedings. Confirm where and when to submit supporting documents, who handles the claim and how to challenge an incorrect classification or amount. Participation and objection rights are useful only when exercised through the required process.

For secured debt, review the security instrument, registration and value of the relevant asset. Article 179 gives secured creditors priority to the extent of their security and regulates distribution, costs and other preferred claims. Security does not guarantee complete recovery where the asset value is insufficient.

Keep management decisions defensible

Maintain accounting records and document the information considered when approving significant decisions. Explain why essential expenditure supports the business and creditors’ interests. Transactions involving owners, related companies or unusually favourable treatment for one creditor deserve particular review.

During restructuring, Article 89 provides for management under trustee supervision unless the court decides otherwise. The Executive Regulations identify transactions requiring trustee approval, including certain guarantees, asset transfers, settlements and waivers of claims.

Personal liability is not automatic because a company fails. Article 246 permits liability in specified circumstances involving proven conduct and responsibility. Directors should not assume either that limited liability removes every risk or that insolvency alone establishes wrongdoing. Preserve the contemporaneous evidence needed to assess individual decisions.

Plan for an orderly exit if rescue is not viable

Article 120 sets out conditions that include cessation of payment, a financial deficit and a business that is not viable, while preserving the law’s other routes to bankruptcy. An insolvency lawyer in Dubai should assess the applicable conditions against the evidence rather than presenting restructuring as suitable for every company.

An orderly process still requires accurate asset records, cooperation with the appointed officeholder and attention to creditor notices. Avoid informal transfers intended to place assets beyond creditors’ reach. Consider the position of employees, customers and continuing contracts when preparing the transition.

When choosing lawyers in Dubai, ask for a written explanation of the applicable regime, immediate restrictions, available options, information gaps and costs. The advice should help management or creditors make a concrete next decision.

About the author

Dr. Hassan Elhais is a Senior Legal Consultant at Amal Al Rashedi Lawyers and Legal Consultants in Dubai. He advises on UAE family, civil, commercial and criminal law matters.

Related Links

• Preventive Settlement and Restructuring Procedures Under the UAE Bankruptcy Laws
• Liquidation in Business: Key Insights & Legal Guidance
• Company I Bought Goods From Didn’t Deliver and Has Closed

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