Dubai: Michael Kortbawi, Senior Partner at BSA Law in Dubai, sheds light on why the UAE is increasingly becoming a preferred hub for restructuring and special situations investing, and what this means for businesses, lenders, and investors.

Why is the UAE increasingly seen as a go-to hub for restructurings and special situations investing?

Michael Kortbawi: What we have seen with clients over the last few years is that the UAE has become a place where restructuring tools are used more effectively. There is greater maturity in the market. Lenders are more sophisticated, borrowers are less reluctant to engage with the concept of restructuring, and investors are more comfortable viewing stressed situations as opportunities.

The new UAE bankruptcy framework, which came into effect in May 2024, has also helped, as it signals a clear preference for greater structure, predictability, and speed in formal processes.

In reality, the UAE has the right ingredients:

The UAE is no longer just a destination for standard investment; it is increasingly a market where restructuring capital, private credit, hedge funds, family offices, and regional lenders operate side by side, assessing the same opportunities.

For a business owner, what are the early signs that a company should consider a formal restructuring route?

Michael Kortbawi: As we often tell clients, by the time you are asking whether you need a restructuring, the business has usually been signalling it for months. It rarely begins with a major, cataclysmic event. Instead, it starts with smaller warning signs, such as using new funds to cover existing liabilities, requesting repeated bank extensions, delaying payments, or founders injecting personal funds just to maintain daily operations.

This is typically the point where informal negotiations become ineffective — not because the business is no longer viable, but because the situation urgently requires structure.

"We have seen fundamentally strong businesses encounter severe difficulties simply because action was taken too late."

The business may have solid assets and a good brand, but issues such as a weak capital structure, tight liquidity, and uncoordinated creditors create immense pressure. Restructuring is not the end; when implemented early, it is a strategic way to retain control.

How do DIFC-based structures and courts influence investor and lender confidence?

Michael Kortbawi: The key difference is confidence. When a DIFC (or ADGM) element is involved, international lenders and investors feel they are operating within a deeply familiar system. Common law principles, English-language courts, established enforcement mechanisms, and experienced judges all provide vital reassurance.

If lenders understand the rules, they are more likely to remain engaged. If investors are confident that their rights are clear and enforceable, they are far more willing to deploy capital.

A DIFC or ADGM structure does not automatically fix a weak business, but it can make the restructuring process viable. It creates a reliable framework for holding structures, financing arrangements, security, dispute resolution, and stakeholder coordination. The legal environment has evolved beautifully alongside the market, with onshore UAE bankruptcy law complemented by these offshore frameworks. Major cases have demonstrated that the ADGM, in particular, is fully capable of handling large-scale, complex restructurings.

In periods of global uncertainty, what are the most common restructuring objectives in the UAE?

Michael Kortbawi: During periods of global instability, capital seeks a stable and well-connected base, which is precisely where the UAE stands out. It offers access to the Gulf, Africa, South Asia, and wider emerging markets, combined with an unparalleled reputation for stability.

Historically, restructurings in the UAE were informal and driven purely by relationships. Today, with the modern Bankruptcy Law, ADGM, DIFC, and more sophisticated lenders, there is a structured framework for addressing financial stress.

In practice, the objective is rarely liquidation. Restructuring in the UAE is focused on:

When companies have cross-border operations or creditors, what makes the UAE an effective platform?

Michael Kortbawi: The UAE acts as a natural control centre. Many regional groups are headquartered or managed from here, even if their core operational assets are located elsewhere — such as Saudi Arabia, Egypt, Africa, India, or Southeast Asia.

Treasury functions, shareholders, lenders, and holding companies are often connected to the UAE, even when corporate structures span multiple jurisdictions like the DIFC, ADGM, the Isle of Man, or Singapore. This makes the UAE an exceptionally effective hub for organising cross-border restructurings.

Its strength lies in connectivity and direct access to capital, enabling seamless coordination between international lenders, local entities, and diverse stakeholders. Concepts such as provisional liquidation are often misunderstood; they can serve as excellent tools for stabilisation and preservation, rather than signalling the end of a business. The UAE frequently acts as the centre of gravity where negotiations and strategic decisions are made.

What are the biggest misconceptions business owners have about restructuring in the UAE?

Michael Kortbawi: The main misconception is that restructuring equates to failure. In reality, it does not. Many businesses initially resist the idea, only to later realise that restructuring helped preserve their operations, protect employment, support loyal suppliers, and ultimately restore long-term viability.

Recent high-profile market examples illustrate how quickly a private or family-owned business can evolve into a complex restructuring case. A company may possess strong fundamentals, but factors such as debt pressure, complex group structures, offshore entities, lender concerns, and governance issues can escalate the situation overnight.

This highlights the critical importance of early intervention and proactive management.

Looking ahead 12–18 months, what trends do you expect to shape UAE investment activity?

Michael Kortbawi: The next 12 to 18 months are expected to be highly active. The UAE remains highly liquid, backed by strong government support and sustained investor interest. However, the market is becoming noticeably more selective.

The key trend is bifurcation: Strong assets will continue to perform exceptionally well, while businesses already under structural pressure may face additional strain from external factors.

Expected market shifts (next 12–18 months)

We are likely to see increased activity across these segments as investors seek opportunities in fundamentally sound but temporarily stressed businesses.

Major regional restructurings remain closely watched due to their systemic importance within the food, logistics, and consumer sectors. The precedent set by landmark cases demonstrates that when a business is vital to the economy, the overarching focus in the UAE is always on preserving operations, protecting jobs, and restructuring debt efficiently.

Overall, the UAE is a disciplined, mature, and structured investment environment.