New Insolvency Law Explained

In brief

The UAE has issued Federal Law No. 51 of 2023 in relation to insolvency (the "New Insolvency Law"), which replaces Federal Law No. 9 of 2016 and comes into effect on 1 May 2024. Although the previous law was more progressive compared to the previous insolvency articles embedded in the old Commercial Code of 1993, at least in relation to the numerous insolvency matters and other protective composition and restructuring witnessed by the courts.

We have set out below some of the key characteristics of the New Insolvency Law:

1. In terms of definitions, the new law has clarified definitions that were somehow unclear or unfortunate in the previous law, by removing for instance the concept of "negative financial position" which restricts the jurisprudential role of the courts.