Abu Dhabi: The UAE has significantly transformed its approach to bankruptcy, moving away from the traditional perception of default and failure towards a modern framework focused on recovery, regulation and economic sustainability, according to the head of the Federal Bankruptcy Court.
Judge Hossam Hassan Al Hamour, President of the Federal Bankruptcy Court, said the UAE has adopted an integrated approach combining government, economic and judicial efforts to ensure business continuity and respond effectively to global economic changes. He noted that the country’s legislation is characterised by flexibility and adaptability to exceptional circumstances, reflecting strong coordination between policy and the judicial system.
He explained that the UAE has developed a comprehensive vision for handling bankruptcy cases, supported by proactive legislation and specialised courts. This, he said, has strengthened the country’s competitiveness and enhanced investor confidence, as evidenced by international reports and data.
From default to recovery
Judge Al Hamour emphasised that modern legislation has redefined bankruptcy, transforming it from a concept associated with failure to a legal tool for restructuring businesses. This shift supports economic sustainability while preserving the rights of all parties involved.
He noted that courts, particularly commercial and bankruptcy courts, now play a broader role beyond dispute resolution, becoming part of the country’s economic infrastructure. Judges are 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 changed perceptions within the business community, positioning bankruptcy as a key element of legal security for investors. This has contributed to the UAE’s strong global competitiveness.
He added 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 giving companies the opportunity to recover before reaching liquidation.
Two key pathways
The law provides two main approaches for dealing with financial distress. The first is financial reorganisation, which includes 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, meanwhile, enables companies to reorganise operations, including adjusting 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 also clarified that liquidation does not necessarily mean the end of a company. Under UAE law, companies can be sold as ongoing projects, preserving their brand, assets and operations, helping retain economic value and minimise losses.
Supporting economic growth
Judge Al Hamour highlighted that investor confidence is essential for economic growth, noting that a strong judicial system, proactive legislation and specialised courts are key to ensuring long-term sustainability.
He said the UAE has strengthened these elements through continuous development of its legal system and alignment with government initiatives, including digital transformation and the use of artificial intelligence.
Integrated approach to crises
The UAE’s framework for handling economic challenges relies on coordination between government entities and the judiciary. Judge Al Hamour pointed to Cabinet Resolution No. 94 of 2026, which activated additional provisions under the law to provide greater flexibility, faster procedures and reduced costs during financial crises.
These measures allow courts to support both debtors and creditors while maintaining economic activity and stability.
Vision for the future
He added that the establishment of a specialised federal bankruptcy court reflects the UAE Ministry of Justice’s commitment to adopting global best practices. The court includes 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 requires a strong and advanced judicial system, noting 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.