In a landmark bankruptcy case judgment issued on 10 October 2021 the Dubai Court of First Instance has held the directors and managers of an insolvent Dubai-based PJSC to be personally liable to pay the outstanding debts of the previously listed company (now in liquidation) pursuant to the UAE Bankruptcy Law. This decision represents a very significant milestone in the UAE insolvency landscape since the enactment of the Bankruptcy Law in late 2016, being the first known instance of a case where such personal liability has been ordered.

Liquidators may often consider it necessary to bring proceedings on behalf of the insolvent company to seek to recover assets or obtain compensation on the company’s behalf. If that action fails, and the insolvent company does not have the funds to meet any costs order made against it, the liquidator is potentially personally exposed to paying those costs pursuant to a non-party costs order. This could operate harshly for liquidators. Every piece of litigation has a winner and a loser.