UAE’s Emergency Bankruptcy Protections for Businesses Hit by Iran War

The United Arab Emirates has put in place special bankruptcy safeguards for firms whose finances have been hurt by the conflict with Iran, allowing eligible enterprises additional time and leeway to reorganize their obligations while curbing creditors’ power to push them into liquidation.

These provisions are available to companies that can prove their monetary strain stems directly from the hostilities and that request judicial protection after the fighting intensified on 28 February 2026.

The scheme was launched through Cabinet Decision No. 94/2026, signed on 1 June 2026, which triggered Title 5 of Federal Decree‑Law No. 51/2023 – the nation’s financial restructuring and insolvency legislation. The rules take effect from 28 February and stay active until the cabinet decides otherwise.

In effect, this establishes a rapid restructuring pathway for firms under financial strain because of the war.

According to the new rules, the Bankruptcy Court may sanction a filing and let the case proceed without assigning a trustee, as long as the debtor demonstrates that the emergency is the source of its fiscal distress.

Companies covered by the scheme may ask for a negotiation period of up to 40 days with their creditors, and any settlement that is approved by the court can remain in force for a maximum of twelve months from the approval date.

If creditors holding at least two‑thirds of the disputed debt endorse the agreement, it becomes enforceable against every creditor, even those who did not participate in the talks.

The framework also extends additional shielding from creditor actions during the emergency. Courts must defer any creditor petitions that aim to initiate bankruptcy against eligible firms.

Assets deemed essential for the continued operation of a company are safeguarded from precautionary seizures, unless a judge finds they are unrelated to the business’s activities.

Enterprises already involved in bankruptcy processes before the emergency can be granted extra time, with courts empowered to double the standard procedural deadlines.

The rules also shield corporate officers. Directors and executives will not be personally liable for deploying company resources to meet regular payroll and salaries needed to keep operations running during the crisis, provided they maintain accurate records, act prudently and in good faith, and continue to safeguard the firm’s goals and assets.

Firms may also obtain new financing while undergoing restructuring. Courts are authorized to approve fresh secured or unsecured loans that rank ahead of existing ordinary debts, and, in line with the law, such financing may be secured against both mortgaged and un‑mortgaged assets.

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