Corporate Restructuring & Insolvency Lawyers in Dubai
Legal Support for Businesses Under Financial Pressure
The Legal Group (TLG) helps companies in financial difficulty restructure their debts, protect their business and deal with creditors under UAE law. We also act for creditors recovering money from insolvent businesses, and for directors facing personal liability. Restructuring and bankruptcy in the UAE are governed by Federal Decree-Law No. 51 of 2023 on Financial Restructuring and Bankruptcy, in force since 1 May 2024. It replaced the 2016 Bankruptcy Law.
Trusted Insolvency Lawyers in Dubai
Key takeaways on UAE bankruptcy law:
- UAE law offers 3 routes: preventive settlement, restructuring and bankruptcy.
- A court moratorium can pause most claims for 3 months, extendable to 6 months.
- Creditor approval needs two-thirds of creditors by number holding more than half of the approved debt.
- Directors can be personally liable for conduct in the 2 years before the company stopped paying.
- The earlier a business acts, the more options it keeps.
The 3 Routes Under UAE Bankruptcy Law
Federal Decree-Law No. 51 of 2023 gives businesses in difficulty three routes. The right one depends on how early you act and whether the business can be saved.
| Preventive settlement | Restructuring | Bankruptcy | |
|---|---|---|---|
| Who it suits | A business in difficulty that is not yet insolvent | A viable business that has stopped paying or cannot pay its debts | A business that cannot be saved |
| Who can apply | The debtor only | The debtor, a creditor or a regulator | The debtor, a creditor or a regulator |
| Who runs the business | Management stays, with a court-appointed controller | Management usually stays; a trustee is appointed | A trustee takes control |
| Protection from creditors | Moratorium of 3 months, extendable to 6 | Moratorium of 3 months, extendable to 6 | Most lawsuits against the debtor are barred |
| Outcome | Settlement plan voted on by creditors | Plan voted on by creditors and approved by the court | Liquidation plan carried out within 2 years |
The law applies to mainland companies, free-zone companies without their own insolvency rules, licensed professional companies and individual traders. DIFC and ADGM companies, and banks and insurers licensed by the Central Bank, follow separate regimes.
How The Legal Group Helps You
For more than 30 years, The Legal Group has advised businesses and individuals across the UAE. In a restructuring we work alongside your accountants and our corporate and commercial and banking and finance lawyers, so the plan works for lenders. Our litigation and arbitration teams support insolvency disputes, and creditors can rely on our debt recovery practice.
Over 30 Years of Legal Experience
Decades of practice in UAE courts give our clients confidence when a business faces financial distress.
Advice for Debtors, Creditors and Directors
We act for companies, creditors and directors, so we understand how each party will approach a restructuring.
Early Distress Planning
Acting early keeps preventive settlement open. We review your position and options before creditors take action.
Creditor Claims and Recovery
We file and prove claims, represent creditors on committees and challenge transactions made before insolvency.
Court and Negotiation Experience
We negotiate with banks and creditor groups and represent clients before the Bankruptcy Court and on appeal.
Ajman Location:
Shaikh Mohammed Bin Rahid - Al Bahia - Ajman
Dubai Location:
Suite, Wafi Mall, The Executive - Oud Metha Rd - Umm Hurair Second - Dubai
+971 4 447 7044
+971 4 447 7088
inquiries@tlg.ae
Our Restructuring & Insolvency Services
Financial Distress Advice
We review cash flow, debts, security and contracts to show which route fits your business and what each one costs.
Preventive Settlement
We prepare preventive settlement applications and plans for businesses in difficulty that are not yet insolvent.
Court-Supervised Restructuring
We draft restructuring plans with your financial advisers and guide them through creditor votes and court approval.
Bankruptcy and Liquidation
When a business cannot be saved, we handle the bankruptcy filing and work with the trustee through liquidation.
Creditor Claims
We file and prove claims in restructuring and bankruptcy, and apply to open proceedings against a debtor where needed.
Negotiations with
Banks and Creditors
We negotiate standstills, rescheduling and new financing with banks, landlords and trade creditors.
Clawback Challenges
We challenge or defend transactions made before insolvency, such as gifts, unbalanced deals and preferential payments.
Director Liability Defence
We advise directors on their duties during distress and defend them against personal liability claims.
Key Rules Every Director and Creditor Should Know
- Court system. Cases are heard by a specialised Bankruptcy Court. First-instance rulings can be appealed within 30 days.
- Creditor voting. A plan needs two-thirds of creditors by number who also hold more than half of the approved debt. The court can still approve a rejected restructuring plan if creditors get at least what they would receive in bankruptcy.
- New financing. A plan can give new money priority over existing debts if the plan provides for it or the required majority approves.
- Clawback. Gifts, unbalanced deals and preferential payments made in the 6 months before payments stopped can be reversed. The period is 2 years for related parties.
- Director liability. Directors, managers and de facto managers can be ordered to pay compensation for risky trading, mismanagement or favouring certain creditors in the 2 years before payments stopped.
How We Handle a Restructuring
1. Confidential review
We look at cash flow, debts, security and contracts to see which route fits.
2. Strategy
We compare an out-of-court deal with preventive settlement, restructuring or bankruptcy.
3. Filing and protection
We prepare the court application and seek a moratorium where it helps.
4. Plan and negotiation
We draft the plan with your financial advisers and negotiate with creditor groups.
5. Vote, approval and delivery
We guide the creditor vote and court approval, then support you while the plan is carried out.
Frequently Asked Questions
What is the new UAE bankruptcy law?
Federal Decree-Law No. 51 of 2023 on Financial Restructuring and Bankruptcy came into force on 1 May 2024 and replaced the 2016 Bankruptcy Law. It created a specialised Bankruptcy Court and offers 3 routes for businesses in difficulty: preventive settlement, restructuring and bankruptcy.
What is the difference between restructuring and bankruptcy in the UAE?
Restructuring aims to save a viable business through a plan that creditors vote on and the court approves. Bankruptcy applies when the business cannot be saved. A trustee takes control, sells the assets and pays creditors in order of priority: secured debts first, then preferred debts, then ordinary debts.
Can a creditor start insolvency proceedings against a company in the UAE?
Yes. A creditor with an undisputed debt that is due can apply to the court after giving the debtor notice, normally 30 days. The debt must meet a minimum amount set in the executive regulations. We advise creditors on whether to file or pursue other recovery routes.
Are directors personally liable when a UAE company goes bankrupt?
They can be. Board members, managers and de facto managers can be ordered to pay compensation for wrongful conduct in the 2 years before the company stopped paying. Examples include risky trading, unfair preference of some creditors, and mismanagement that left assets below 20% of debts.
Does a moratorium stop all claims against my company?
Not all. In preventive settlement and restructuring, the court moratorium lasts 3 months and can be extended to 6. Some claims, such as labour cases, are not covered. In bankruptcy, most lawsuits against the debtor are barred, with limited exceptions such as criminal cases.
When should a struggling company speak to an insolvency lawyer?
As soon as it expects trouble paying debts as they fall due. Early advice keeps preventive settlement open, reduces the risk of director liability and gives more time to negotiate. Waiting until creditors file can leave bankruptcy as the only route.
Talk to a Restructuring Lawyer in Dubai
If your business is under financial pressure, or a debtor owes you money and is struggling to pay, early legal advice protects your position. Contact The Legal Group for a confidential review of your options.