Seven Impacts of the new UAE Bankruptcy Law

Seven Impacts of the new UAE Bankruptcy Law

UAE Economy suffered a huge financial crisis in the year 2008. Ever since, the UAE bankruptcy law also known as the UAE Insolvency Law has been a subject of concentration in the juridical departments as well as among investors.

Insolvencies and bankruptcy of companies in the UAE have been a time-consuming process whereas the recovery level is extremely low. Moreover, to retain UAE as the commercial hub and an investor’s paradise as it is known to be – in 2017 the much-awaited bankruptcy rules were changed and the new UAE insolvency law was brought into existence.

Why the old UAE Bankruptcy Law had to change?

The Federal Law No. 18 of 1993 or the old UAE business law regarding insolvency was not an all-inclusive regime that catered businessmen and investors effectively. The bankruptcy rules aligned within the old UAE Bankruptcy Law mainly set its framework across three different laws – those are the Commercial Companies Law, the Commercial Transactions Law and the Civil Code. Irrespective, companies faced harsh consequences in case of bankruptcy and owners of businesses would face criminal sanctions and strict sentences – thus change was essential.

So, what is new UAE Bankruptcy Law?

The Federal Law No. 9 of 2016 or the Bankruptcy Law is a disseminated decree given by His Highness Sheikh Khalifa bin Zayed Al Nahyan. This new business law is originated on up-to-date legislative systems and economic principles, considering global developments and alterations among economic and business sectors. The insolvency law is implemented on private enterprises as well as government owned companies.

The new UAE Bankruptcy Law has put forth some key changes such as:

  • New UAE Bankruptcy Law discards the current Commercial Code insolvency regime.
  • The new bankruptcy rules provide a wider application and is not limited to commercial traders.
  • New federal implements a Financial Restructuring Committee that directs business in insolvent situations.
  • New UAE Bankruptcy Law creates a balance sheet and strives to inventively finds alternative tests of insolvency.
  • There has been an omission of criminal offence under bankruptcy as well as even bounced cheques.
  • New Insolvency Law has set AED 100,000 minimum verge for creditor under insolvency proceedings.


  1. The new UAE Bankruptcy Law has helped to improve the economy; build business confidence and provide assurance to investors.
  2. The Law has given fortification to companies facing financial complications and economic difficulties.
  3. The UAE Insolvency Law has also facilitated liquidation of debtors’ assets in the event of insolvency.
  4. The new bankruptcy rules under the Federal Law No. 9 of 2016 has permitted the possibility of getting fresh loans under the conditions set by the law.
  5. The law has increased value among worldwide business communities and has also appealed foreign investments.
  6. Legislation dealt earlier made businessmen with unpaid debts flee in the country, but this is not the case anymore and businessmen are finding substitute ways.
  7. Now, Bankruptcy can be sorted outside the court with the help of the Committee of Financial Restructuring – that has things easier.

Be attentive dealing with the new UAE Bankruptcy Law:

While the impact has been positive it is equally important to be cautious before dealing the New UAE Insolvency Law.

  • The law instructs stringent penalties for violators who misuse the law and declare themselves insolvent deliberately.
  • Under the new law if found guilty of misapplication, prison sentence up to five years and a fine of Dh1 million will be charged on the violators.

While the New UAE Insolvency Law generates a robust legal insolvency framework that asserts protection of the investor, more and more number of businessmen are seeking investments make sure you are not left behind!

Contact Shuraa Business Setup Consultants and know more in detail about the UAE Insolvency Law or any other Business Law in UAE and ways to keep your company and investments protected.