Insolvency 2025

UAE Law and Practice Contributed by: Abdelhak Attalah and Ghassan Hidar, Attalah Legal Consultancy

• Trustee: if the Bankruptcy Court accepts the appli - cation to open restructuring or bankruptcy adju - dication procedures, it will designate the trustee nominated by the Bankruptcy Unit in the same decision. • Controller: either on its own initiative or at the request of the debtor, creditors or the Bankruptcy Unit (if the debtor is subject to a supervisory entity), the Bankruptcy Court may assign the Bankruptcy Unit or creditors to nominate one or more control - lers from the roster of experts and determine their fees. The court will then issue its decision on their designation and fee approval. Article 179 of the New Bankruptcy Law classifies creditors into three classes, listed in the following pri - ority ranking: • secured creditors have debts secured by mort - gages, special liens on property, or general liens on the debtor’s assets, granting them priority in repayment; • privileged debts, as set forth in Section 7 of Article 179; and • creditors with ordinary debts hold debts without specific security interests or debts that have dis - 2. Creditors 2.1 Types of Creditors puted guarantee, as stated in Article 104. 2.2 Priority Claims in Restructuring and Insolvency Proceedings In the event of a preventative settlement, new financ - ing will receive priority over unsecured debts, and can potentially be secured and prioritised over exist - ing secured debts on the pledged assets. This priority depends on the court’s determination of whether the financing is necessary for obtaining essential materi - als or services to maintain business operations or to generate returns that help repay outstanding debts. According to Section 1 of Article 179 of the New Bank - ruptcy Law, creditors with debts secured by movable or immovable property are given priority over other creditors with privileged debts and ordinary creditors, up to the extent of their guarantees. Following these

secured creditors, those with privileged debts are pri - oritised according to the order specified by Section 7 of Article 179, which outlines seven categories of priority for claims in bankruptcy proceedings, which are paid after the secured claims. These privileged debts are settled before ordinary debts in the follow- ing order: • judicial fees and expenses; • alimony debts; • government dues; • employee wages and salaries; • expert fees – ie, fees agreed upon between the debtor and any appointed expert; • additional expert fees – ie, fees for experts appointed since the commencement of the pro - ceedings; and • post-commencement fees, costs and expenses – ie, any fees, costs or expenses incurred after the decision to commence proceedings in order to secure goods and services for the debtor, continue any beneficial contracts, or maintain the debtor’s business operations in accordance with the law. 2.3 Secured Creditors UAE laws allow security over qualifying property to be granted to individuals, corporations and both licensed and unlicensed banks or financial institutions, irre - spective of their national status. Different types of security are available to creditors under UAE federal and local laws, such as: • the Federal Civil Transactions Code; • the Federal Commercial Transactions Code; • the Federal Maritime Code; • Federal Law No 4 of 2020 on Securing the Rights in Movables; • Law No 14 of 2008 Concerning Mortgages in the Emirate of Dubai; and • Cabinet Resolution 29 of 2021 Concerning the Implementing Regulations of Federal Law 4 of 2020. These laws empower creditors to take various types of security, as follows.

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