Many people imagine that anyone experiencing financial distress can immediately resort to the Personal Insolvency Law in the UAE, but the legal reality is more nuanced. Insolvency is not a general descriptor for anyone late on payments; rather, it is a specific legal status defined by clear conditions and categories. Understanding these conditions determines whether the correct path is a financial settlement, debt restructuring, or filing a formal insolvency application before the court.
On 30th March 2026, the Lok Sabha passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2025 which was subsequently enforced on 6th April 2026. The Amendment Act of 2026 seeks to introduce reform measures to address practical challenges within the system and develop Indian insolvency law in line with global best practices. The amendment includes a host of measures aimed at reducing delays, strengthening creditor empowerment and creating a more investor-friendly framework.
When a company in the UAE starts missing payments, the legal risk does not stop at the balance sheet. For directors, financial distress can quickly become personal. Director liability in UAE insolvency is not a theoretical concern reserved for extreme cases. It becomes relevant the moment management delays action, conceals losses, favors certain creditors, or continues trading without a credible path forward.
I. WHY THIS TOPIC IS IMPORTANT
In what was deemed an “unprecedented” application, the High Court recently refused to confirm the appointment of an interim examiner to a special purpose vehicle incorporated to develop commercial property. The Court determined that the company was not the “type of company for which examinership was designed”. The decision highlights some of the factors that the Court will consider when exercising its discretion to confirm the appointment of an examiner.
In the current environment of heightened geopolitical tension, including the effective closure of the Strait of Hormuz and impacts on regional oil and gas infrastructure, global supply chain disruption and volatility in energy markets, force majeure provisions are more important than ever.