UAE Strengthens Bankruptcy Framework as a Tool for Recovery and Economic Stability
Abu Dhabi: The United Arab Emirates (UAE) has undergone a significant transformation in its bankruptcy approach, shifting from a traditional view of default and failure to a modern framework that emphasizes recovery, regulation, and economic sustainability. This development was highlighted by Judge Hossam Hassan Al Hamour, President of the Federal Bankruptcy Court.
Judge Al Hamour stated that the UAE has embraced an integrated strategy that combines government, economic, and judicial efforts to ensure business continuity and effectively respond to global economic shifts. He noted that the country’s legislation is designed to be flexible and adaptable to exceptional circumstances, demonstrating strong coordination between policy and the judiciary.
The UAE has developed 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 reflected in 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, have taken on a broader role beyond mere dispute resolution, becoming integral components of the country’s economic infrastructure. Judges are now trained 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 altered perceptions within the business community, positioning bankruptcy as a crucial element of legal security for investors. This change has significantly contributed to the UAE’s strong global competitiveness.
He also noted that the law’s title was revised from “Bankruptcy Law” to “Financial Reorganisation and Bankruptcy Law” to better reflect its 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: financial reorganisation and restructuring.
Financial reorganisation includes preventive settlement, which 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 support from 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, thereby retaining economic value and minimizing losses.
Supporting Economic Growth
Judge Al Hamour highlighted the importance of investor confidence for economic growth, noting that a robust judicial system, proactive legislation, and specialized courts are essential for ensuring long-term sustainability.
He stated that the UAE has reinforced these elements through 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 framework for managing economic challenges relies on effective 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, expedite procedures, and reduce 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. The court comprises judges and experts in economic, financial, and legal fields to ensure the efficient handling of complex cases.
Judge Al Hamour concluded that achieving the UAE Vision 2031 necessitates a strong and advanced judicial system, emphasizing 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.
Source: www.emirates247.com
Read all the latest developments and breaking updates in the Latest News section.
Published on 2026-06-28 11:21:00 • By the Editorial Desk
