The UAE Bankruptcy Law, officially known as Federal Decree-Law No. 9 of 2016, undergone new changes

 The UAE Bankruptcy Law, established under Federal Decree-Law No. 9 of 2016, sets the legal framework for handling financial distress and insolvency within the country. It offers varied tools and procedures for both debtors and creditors, focusing on:

 Restructuring: Struggling companies can seek to reorganize their debts and restore solvency under court supervision. 

Liquidation: When restructuring isn't viable, the law provides a clear and structured process for winding down companies and distributing assets to creditors. 

Personal Bankruptcy Protection: Individuals burdened with debt can file for personal bankruptcy and find relief from creditor claims. 

Key Features of the Law: 

Initiating Proceedings: Both debtors and creditors can initiate the process.

Debtors are obligated to file if they: Fail to pay debts for 30 consecutive business days.

Have assets insufficient to cover liabilities.

Creditors can file if the debtor: Fails to settle a debt exceeding AED 100,000 within 30 days of a written demand.

Restructuring Options: The law offers several options, including:

Preventive Restructuring: Debtors can propose a restructuring plan to creditors before formal proceedings begin.

Restructuring by Agreement: Creditors and debtors can agree on a restructuring plan outside of court.

Court-Supervised Restructuring: If no agreement is reached, the court can oversee a restructuring process with a restructuring practitioner appointed.

Liquidation: If restructuring fails, the court orders liquidation of the debtor's assets to satisfy creditors. A court-appointed liquidator oversees the process.

Personal Bankruptcy: Individuals can file for personal bankruptcy if they cannot repay their debts. The court appoints a trustee to manage assets and distribute them to creditors. The debtor may be discharged from remaining debts after meeting specific requirements.

Recent Amendments:

The law has undergone revisions since its implementation, with the most impactful changes in 2021 and 2023, aiming to:

 Clarify Director and Manager Liability: The amendments made it harder for creditors to hold directors and managers personally liable for insolvency unless they engaged in specific misconduct.

Empower Secured Creditors: Secured creditors now have more control over their assets during proceedings and can enforce their rights directly through the bankruptcy court.

Streamline Procedures: The revisions aimed to make bankruptcy proceedings more efficient and timely.

Impact of the Law: The UAE Bankruptcy Law has significantly improved the legal framework for dealing with financial distress and insolvency in the country. It provides various options for resolving financial problems, promoting a more transparent and efficient system for creditors to recover debts.

 The UAE Bankruptcy Law has undergone several important changes in recent years, with the most notable ones coming in 2021 and 2023. Here's a summary of the key new developments:

 Changes in 2021:

Clarification of directors' and managers' personal liability: The amendments addressed concerns about the automatic liability previously faced by directors and managers of insolvent companies. Now, personal liability only applies if the court can prove they committed specific acts that contributed to the company's insolvency (Article 147).

Enhanced rights for secured creditors: Secured creditors, like banks, now have greater control over their assets during bankruptcy proceedings. They can enforce their rights directly through the bankruptcy court without needing separate legal action.

New options for restructuring: The Law introduced a "reorganization" process, allowing financially distressed companies to restructure their debts and stay operational under court supervision.

Streamlined procedures: The amendments aimed to make bankruptcy proceedings quicker and more efficient.

Changes in 2023:

Further clarification of directors' and managers' liability: Clarify the personal liability of directors and managers: The amendments narrowed the scope of personal liability for directors and managers, making it more difficult for creditors to hold them responsible for the company's insolvency unless they have committed specific acts of misconduct.

Enhance the rights of secured creditors: Secured creditors now have greater control over their assets during bankruptcy proceedings and can enforce their rights directly through the bankruptcy court.

Focus on training and implementation: The Ministry of Finance is working with judicial authorities to develop training programs and refine procedures for the effective implementation of the new law.

Current situation:

The amended Bankruptcy Law is still relatively new, and its practical implications are evolving.

Businesses and individuals involved in potential bankruptcy situations should seek legal advice from experienced professionals familiar with the latest developments. 

The Financial Restructuring Committee is continuing to work on improvements and refinements to the bankruptcy framework. 

Key Features of the UAE Bankruptcy Law: 

Initiating Bankruptcy Proceedings: Both debtors and creditors can initiate bankruptcy proceedings. Debtors are obligated to file if they are unable to pay their debts for 30 consecutive business days or their assets are insufficient to cover their liabilities. Creditors can file if the debtor fails to settle a debt exceeding AED 100,000 within 30 days of a written demand. 

Restructuring Options: The law offers various restructuring options, including: 

Preventive Restructuring: A debtor can propose a restructuring plan to creditors before formal bankruptcy proceedings commence.

Restructuring by Agreement: Creditors and the debtor can agree on a restructuring plan outside of court.

Court-Supervised Restructuring: If agreement is not reached, the court can supervise a restructuring process, involving the appointment of a restructuring practitioner.

Liquidation: If restructuring fails, the court will order the liquidation of the debtor's assets to satisfy creditors' claims. The liquidation process is overseen by a liquidator appointed by the court. 

Personal Bankruptcy: Individuals can file for personal bankruptcy if they are unable to repay their debts. The court will then appoint a trustee to manage the debtor's assets and distribute them to creditors. The debtor may be granted a discharge from their remaining debts after fulfilling certain requirements. 

Conclusion: The UAE Bankruptcy Law is a complex and evolving piece of legislation. If you are facing financial difficulties or have questions about the law, it is important to seek legal advice from a qualified professional.