UAE Strengthens Bankruptcy Framework, Transforming Default into Recovery and Economic Stability
Abu Dhabi: The United Arab Emirates (UAE) has made significant strides in reshaping its bankruptcy framework, moving away from traditional views of default and failure. This transformation emphasizes recovery, regulation, and economic sustainability, as articulated by Judge Hossam Hassan Al Hamour, President of the Federal Bankruptcy Court.
Judge Al Hamour noted that the UAE has embraced an integrated approach that combines government, economic, and judicial efforts to ensure business continuity and effectively respond to global economic shifts. He highlighted the flexibility and adaptability of the country’s legislation, which reflects strong coordination between policy and the judicial system.
The UAE has established a comprehensive vision for managing bankruptcy cases, supported by proactive legislation and specialized courts. This approach has bolstered the nation’s competitiveness and enhanced investor confidence, as demonstrated by various international reports and data.
From Default to Recovery
Judge Al Hamour emphasized that modern legislation has redefined bankruptcy, transforming it from a concept associated with failure into a legal tool for business restructuring. This shift supports economic sustainability while safeguarding the rights of all stakeholders involved.
He pointed out that courts, particularly commercial and bankruptcy courts, now play a broader role beyond mere dispute resolution. They have become integral to the country’s economic infrastructure. Judges receive training in economic and financial matters, enabling them to contribute to economic stability, anticipate challenges, and support legislative improvements.
Strengthening Investor Confidence
According to Judge Al Hamour, the updated legal framework has shifted perceptions within the business community, positioning bankruptcy as a vital element of legal security for investors. This change has significantly contributed to the UAE’s strong global competitiveness.
He noted that the law’s title was revised from “Bankruptcy Law” to “Financial Reorganisation and Bankruptcy Law” to reflect its new focus on maintaining business continuity and providing companies the opportunity to recover before facing liquidation.
Two Key Pathways
The law outlines two primary approaches for addressing financial distress. The first is financial reorganisation, which encompasses preventive settlement and restructuring.
Preventive settlement allows a debtor to submit a court-supervised plan at an early stage, ensuring transparency and coordination with creditors. Restructuring enables companies to reorganize their operations, including adjustments to activities, workforce, or business models, with the support of financial experts and approval from creditors and the court.
Judge Al Hamour stressed that these measures aim to preserve economic activity whenever there is a viable opportunity for recovery.
Rethinking Liquidation
He clarified that liquidation does not necessarily signify the end of a company. Under UAE law, companies can be sold as ongoing projects, preserving their brand, assets, and operations. This approach helps retain economic value and minimize losses.
Supporting Economic Growth
Judge Al Hamour highlighted that investor confidence is crucial for economic growth. He noted that a robust judicial system, proactive legislation, and specialized courts are essential for ensuring long-term sustainability.
He stated that the UAE has strengthened these elements through the continuous development of its legal system and alignment with government initiatives, including digital transformation and the integration of artificial intelligence.
Integrated Approach to Crises
The UAE’s strategy for addressing economic challenges relies on coordination between government entities and the judiciary. Judge Al Hamour referenced Cabinet Resolution No. 94 of 2026, which activated additional provisions under the law to provide greater flexibility, expedited procedures, and reduced costs during financial crises.
These measures enable courts to support both debtors and creditors while maintaining economic activity and stability.
Vision for the Future
He added that the establishment of a specialized federal bankruptcy court reflects the UAE Ministry of Justice’s commitment to adopting global best practices. This court comprises judges and experts in economic, financial, and legal fields to ensure efficient handling of complex cases.
Judge Al Hamour concluded that achieving the UAE Vision 2031 necessitates a strong and advanced judicial system. He noted that investors place significant importance not only on economic incentives but also on legal stability and the efficiency of judicial processes in protecting rights and managing risks.
As reported by www.emirates247.com.
Explore the latest digital editions of FAME Delivered in the Magazine section.
Published on 2026-06-28 11:21:00 • By FAME Delivered News Desk