Home / Knowledge Hub / News

Professional Fees Now Priority Debts Under Revised UAE Bankruptcy Law

The new UAE Bankruptcy Law was widely discussed and debated upon its introduction in 2016. Brought in to encourage a ‘rescue culture’, the regulations were hailed as a significant move in the right direction for the UAE as an international business hub.

The new law has now had several years to embed, and the legislature has had ample time to analyse the efficacy of the regulations and their practical implications.

As such, the legislative committee has recently promulgated important new amendments to the 2016 law which aim to finesse the regulations and procedures.

Our restructuring and bankruptcy lawyers have reviewed the revised legislation, analysing the reasonings behind the changes and the envisaged impact of the amendments.


The most significant update relates to a new Article 4. This article now allows any ‘regulated company’ to apply to the Financial Restructuring Committee (FRC) to administer a bankruptcy application. Previously only ‘financial institutions’ licensed in the UAE that were facing current or projected financial difficulties could submit an application to the FRC. This amendment widens the scope of the FRC’s remit and the applicability of the legislation to a greater and further-reaching group of business entities.

The revised law now also states that debtors’ professional fees (including legal fees) which are incurred as a result of bankruptcy proceedings, are now to be treated as a priority debt. This was not previously the case and is welcome protection for professionals involved in the resolution of complicated and time-consuming cases of bankruptcy.

Additionally, the amendments include a suppression of the word ‘lien’ in favour of the use of ‘preferential rights’. As liens are more broad-ranging and widely interpreted, this is a clear move by the legislature to narrow the practical application of the term within the context of the legislation.

Furthermore, secured creditors now have additional rights to vote on a preventative composition to the extent that the money they are owed exceeds the value of the security. This was not previously the case and is welcome news for secured creditors.

Moreover, it is worth mentioning that certain notices of bankruptcy may now be made electronically.


It is encouraging to see the UAE Bankruptcy Law being revised after careful analysis of its efficiency and utility.

The UAE's Vision 2021 includes the firm target of making the UAE the world’s first in ease of doing business. Any and all efforts to improve the legislative framework supporting businesses in the UAE is encouraging and should be applauded.

These updates are clearly a result of careful reflection upon the suitability of the Bankruptcy Law. The resulting amendments are most welcome and may go some way towards encouraging greater engagement with the law by businesses in financial distress.

For further details and insight from our restructuring and bankruptcy lawyers, please contact Partner Michael Kortbawi and Senior Associate Barry Greenberg.
Related Insights
Got a question or enquiry? Contact us