Federal Decree by Law No. (19) of 2019 Concerning Insolvency (justice and juiciary law)

Article (1) Definitions  
In application of the provisions of this Law by Decree, the following words and phrases  
shall have the meanings assigned to each of them unless the context requires otherwise:  
State  : United Arab Emirates.  
Ministry  : Ministry of Finance.  
Minis ter : Minister of Finance.  
Court  : The competent court subject to rules of jurisdiction stipulated 
in the aforementioned Federal Law No. (11) of 1992.  
Debtor  : The natural person who is in insolvency.  
Debtor's Debts  : Debts due by the debtor arising from an obligation created 
towards him prior to the date on which the court issues its 
decision to commence the insolvency procedures.  
Debtor's 
Assets  : Movable and immovable assets added to the positive side 
of the debtor's financial liability on the date of the decision 
to commence the insolvency procedures or during any 
procedures stipulated in this Law by Decree.  
Debtor's 
Businesses  : Activities practised or not practised  by the debtor during 
taking any procedure stipulated in this Law by Decree.   
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 Cessation of 
Payment  : Inability of the debtor to pay any due debt.  
Interested Party .  
 
Interested 
Party  : A natural or legal person that has an interest in any of the 
procedures stipulated in this Law by Decree  
Exchange Rate  : The exchange rate of the Emirati Dirham against foreign 
currencies as announced by the Central Bank of the United 
Arab Emirates.  
Measures  : Necessary measures taken by the court in order to safely 
maintain or manage the debtor's funds in accordance with the 
provisions of this Law by Decree.  
Experts' Roster  : The Roster of accredited experts in accordance with the 
provisions of the aforementioned Law by Decree No. (9) of 
2016.  
Expert  : The expert who is recorded at the Experts' Roster.  
 
Trustee  : The trustee appointed by the court from among the experts 
recorded in the Experts' Roster.  
Scheme  : The scheme to settle the financial liabilities of the debtor, 
prepared in accordance with the provisions of this Law by 
Decree  
Insolvency  : Facing current or potential financial difficulties that make the 
debtor unable to settle his debts.  
 
title   
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Article (2) Scope of Application  
The provisions of this Law by Decree shall be applicable to debtors who are not subject 
to the provisions of the aforementioned Federal Law by Decree No. (9) of 2016.  
 
Title Two : Settlement of Financial Liabilities  
Chapter One Application for Commencing Procedures of Settlement of 
Financial Liabilities

Article (3) Submittal of Application  
The debtor may submit an application to the court without any litigation against anyo ne 
to settle his financial liabilities in accordance with to the provisions of this Law by 
Decree, provided that the application shall be accompanied with the following 
documents:  
 
A memo containing a brief description of the financial position and any det ails relevant 
to the sources of his income inside or outside the State, his job, professional or craft 
status, as the case may be, predictions of the debtor's cash liquidity and the sources of 
such liquidity within the twelve (12) months following the subm ittal of the application.  
A statement of names and addresses of creditors whose debts the debtor is unable or is 
expected to be unable to pay; the value of the debt of each creditor, the due dates and 
guarantees provided to such creditors, if any.  
A detail ed statement of movable and immovable funds inside and outside the State and 
the approximate value thereof on the date of the application submittal.  
A statement of any claims, legal or judicial proceedings taken against the debtor.  
A statement from the deb tor that he faces current or potential financial difficulties and 
that he is unable or is expected to be unable to pay all his debts, whether those that are  
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 due on the date of the application submittal or those that will be due in the future.  
The funds req uired for living of the debtor and his family in addition to any other person 
supported thereby.  
Proposals of the debtor about the settlement of his financial liabilities.  
The debtor's nomination of an expert to undertake the procedures pursuant to the 
provisions of this Law by Decree.  
Disclosure statement about the financial transfers outside the State that occurred during 
the last twelve (12) months.  
Any other documents that support the submittal of the application or that are required 
by the court.

Article (4) Non -completion of Required Data  
 
If the debtor could not provide any of the documents or data required subject to the 
provisions of article (3) of this Law by Decree, he shall state the reasons in his 
application.  
If the court thinks that documents submitted are not sufficient to reach a decision 
concerning the application, the court may give the debtor a grace period to submit any 
additional data or documents.

Article (5) Payment of Fees, Costs and Expenses  
The debtor shall pay the judicial  fees.  
The court shall estimate the fees of the experts and the costs and expenses expected for 
the procedures of financial settlement and shall notify the debtor thereof within a time 
not exceeding the day following the day of the application submittal.   
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 The debtor shall deposit at the court's treasury a cash amount or a bank guarantee on 
the date determined by the court to cover the fees of the trustee and the costs and 
expenses expected for the procedures of the financial settlement.  
The court may, at th e request of the debtor, postpone the deposit of the amount or bank 
guarantee stipulated in Clause (2) of this Article if sufficient funds required to cover costs 
and expenses on the date of the application submittal are not available; provided that 
such f unds shall be collected, prior to all other creditors.

Article (6) Taking Measures  
The court may, at the request of any interested party or upon its discretion, take 
necessary measures to keep and maintain the funds of the debtor until the application is 
decided on or during the procedures of settlement of financial liabilities.

Article (7) Deciding on the Application  
 
The court shall decide on the request without a declaration or pleading within a period 
not exceeding five (5) working days as of the submitta l date of the application fulfilling 
its requirements.  
If the court accepts the request, it shall decide to commence the procedures of 
settlement of financial liabilities.  
The decision of the court to accept the debtor's application for settlement of his f inancial 
liabilities shall result in the suspension of the creditor's right to request the execution on 
the debtor's funds or to request the commencement of the procedures of his insolvency 
and liquidation of his funds. This suspension shall continue until  the completion of the 
procedures of settlement of the debtor's financial liabilities.   
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 Notwithstanding the provisions of Clause (3) of this Article, the creditor may, if he has a 
guaranteed debt, pledge the right of execution on his guarantees when the deb t is due, 
provided that he obtains a permission from the court. The court in turn shall decide on 
giving the permission within ten (10) working days as of the date of his request without 
litigation. The court shall also ascertain when giving the permission  that there is no 
conspiracy between the debtor and the guaranteed creditor and the priority degree of 
the guaranteed creditor if there are multiple creditors who have guarantees on the same 
funds.  
The decision issued by the court to refuse the permission may be appealed before the 
Court of Appeal. Such appeal shall result in the suspension of the procedures of 
settlement of financial liabilities. The decision issued on the appeal shall be final.  
The decision of the court to commence the procedures of settlement of financial 
liabilities shall result in the suspension of the debtor's obligation to request his 
insolvency and liquidation of his funds. Suspension of execution shall continue during 
the period of the procedures of settlement of financial liabilities unless the debtor 
violates his obligations stipulated in the scheme, in accordance with the provisions of 
this Law by Decree.  
The application submitted by the debtor for settlement of his financial liabilities shall not 
make his forwa rd debts due at the time of submitting this application.

Article (8) Appointment of Expert  
 
The court shall appoint, in the decision to commence the procedures of settlement of 
financial liabilities, one or more experts to assist the debtor to settle his fi nancial 
liabilities.   
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 If more than one expert is appointed, they should perform their duties jointly and shall 
take decisions with the majority of votes. In the event of parity, the matter shall be 
referred to the court to decide. The court may divide the d uties among the experts and 
shall determine the way of their work, whether jointly or severally.  
The court shall inform the expert of the decision of his appointment on a date not 
exceeding the day following the issuance of its decision to commence the pro cedures 
and shall provide him with all information available concerning the application.  
The expert shall not be a creditor to the debtor, has an interest in the debtor or relative to 
the debtor to the fourth degree.  
The expert shall undertake his duties a s soon as he is informed of the decision of 
appointment.  
The expert shall, within five (5) working days as of the date on which he is notified of his 
appointment decision, publish the summary of the decision to commence the 
procedures in two wide -spread da ily newspapers, one in Arabic and the other in English, 
provided that the publication shall include an invitation to the creditors to submit their 
claims and the supporting instruments and deliver them to the expert within a period 
not exceeding twenty (20 ) working days as of the publication date.  
The expert is entitled to require any details or information from the debtor or any other 
person that has information relevant to the settlement procedures. In case of refusing to 
provide those details or informat ion, the matter shall be presented to the court.  
The debtor shall provide the expert with any additional details not informed to the court 
about his creditors or amounts of debts within the period determined by the expert.  
The expert is entitled to present  a request to the court to assist him in performing his 
duty as required, including the request to disburse any amounts of money to cover costs 
and expenses necessary for the progress of the procedures.   
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Article (9) Submitting Debt Documents  
 
The creditors s hall, even if their debts are not due or guaranteed, provide the expert, 
within the period determined in Clause (6) of article (8) of this Law by Decree, with the 
documents of their debts accompanied by their details and guarantees, if any, the due 
dates o f such debts and the amounts in AED based on the exchange rate of the day on 
which the court decided to commence the procedures.  
The expert may require the creditor who presented his claims to provide notes about the 
debt, complete relevant documents or to  certify any claims by the auditor of the creditor 
or an independent auditor.

Article (10) Debts' Report  
 
The expert shall prepare a list of all creditors of the debtor and specify the addresses of 
each of them, the amount of the due debt, its due date and a statement of the owners of 
guaranteed debts, the guarantees designated for each of them in addition to the 
approximate value of these guarantees, if any, and any other data deemed necessary by 
the expert to perform his duties.  
Without prejudice to Cl ause (1) of this Article, the expert shall prepare a report about the 
funds and debts of the debtor and all circumstances that relate to his default or cessation 
of payment and shall submit it to the court within twenty (20) working days as of the 
expiry d ate of the grace period given to creditors in Clause (6) of article (9) of this Law by 
Decree to submit documents of their debts. The report shall demonstrate whether or not 
the settlement of financial liabilities is possible in the light of income resourc es of the  
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 debtor.  
The court may, at the request of the expert, give him additional period for the 
preparation of the report stated in Clause (2) of this Article.

Article (11) Examining the Report  
 
The court shall examine the report prepared by the expert in  order to verify the debts of 
the debtor.  
If the court deems it necessary to complete the procedures of settlement of financial 
liabilities, it shall issue a decision to mandate the expert to prepare the scheme.

Article (12) Application Dismissal  
In all eve nts, the court shall decide to stop the procedures of settlement of financial 
liabilities and dismiss the application for settlement of financial liabilities in the 
following events:  
 
If it is proved to the court that the debtor has made any action or abstained to make any 
action in order to conceal or destroy any part of his funds.  
If the debtor has provided false data about his debts, rights or funds.  
If the debtor is in cessation of payment of any of his debts in their due dates for a period 
exceedin g fifty (50) consecutive working days due to his incapacity to fulfil these debts.  
 
Chapter Two Preparation of Settlement of Financial Liabilities Scheme

Article (13) Presenting the Scheme to Creditors  
  
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 The expert shall prepare the scheme in cooperation with the debtor, provide a copy for 
creditors and lodge a copy at the court within (22) working days as of the date on which 
the court mandated the expert to prepare the scheme.  
The court may extend the period of lodging the scheme if needed.  
The expert shall invite the debtor and creditors to one or more meetings, and shall 
specify the place and time, to discuss and vote on the scheme, provided that the first 
meeting shall be held within a period not exceeding ten (10) working days as of the da te 
on which creditors are provided with a copy of the scheme in according with Clause (1) 
of this Article.  
The expert may send the invitation to attend the meeting stipulated in Clause (3) of this 
Article by any possible means of communication.  
The expert may invite creditors to other meetings during the procedures of the scheme 
preparation or to postpone the date of the creditors' meeting, taking into consideration 
the number of known creditors and any other significant circumstances to hold the 
meeting.  
The debtor and creditor shall attend the meeting in person or through their legal 
representatives.  
The period proposed for executing the scheme may not exceed three years as of the date 
on which the court approved the scheme. This period may be extended at the consent of 
the majority of creditors who own two thirds of the debts that were not paid as per the 
scheme.

Article (14) Replacement of Guarantees  
 
The expert may propose an alternative guarantee for any creditor of guaranteed debt,  
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 provided that such pr ocedure would achieve a benefit for the execution of the scheme 
and the value of the alternative guarantee shall not be less than the value of the 
guaranteed debt.  
If the creditor of the guaranteed debt does not accept the proposed offer, the expert may 
present the matter to the court and the latter is entitled to order the replacement of the 
guarantee if this would achieve a benefit for the execution of the scheme and will not 
harm the interest of the guaranteed creditor.

Article (15) Voting on the Scheme  
 
The meeting of creditors stipulated in Clause (3) of article (13) of this Law by Decree 
shall not be duly valid unless attended by a majority that exceeds half of creditors' 
number, provided that such creditors shall represent at least two thirds of total validated 
debts.  
If the quorum is not complete in the first meeting, creditors shall be invited to a second 
meeting within ten (10) working days as of the date of the first meeting. The meeting 
shall be valid with the actual attendants provided that the at tendants shall represent at 
least two thirds of total debts. If this quorum is not achieved, the expert shall present the 
matter to the court to decide the possibility to complete the procedures of financial 
settlement of the debtor.  
Voting shall be confin ed to creditors whose claims are accepted by the court. Other 
creditors may not vote unless the court allows the same.

Article (16) Persons with No Right to Vote  
  
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 The following persons may not participate in the creditors meeting or vote therein:  
Spouse of the debtor.  
Any person financially supported by the debtor.  
Relatives of the debtor to the second degree.  
The expert shall manage the creditors' meeting and shall verify during the meeting the 
capacity of persons entitled to vote.

Article (17) Amendment of Scheme  
 
The debtor or any of the creditors may propose amendments to the scheme during the 
meeting. Creditors shall vote in the meeting on any amendments to the scheme.  
The expert may hold a second meeting for creditors to vote on the proposed 
amendments.

Article (18) Approval of the Scheme  
 
Approving the scheme shall be with the majority of votes of attending creditors whose 
debts are not less than two thirds of the value of validated debts.  
The expert shall give the creditors who did not approve or abstained to vote on the 
scheme or did not participate in voting a grace period not exceeding fifteen (15) working 
days as of the date of ratification of the scheme to join it.  
The creditor who did not attend the meetings dedicated to vote on the scheme  shall be 
deemed to have approved the scheme if he provided the expert with his requests which 
have been included without any change to the scheme prior to the meeting.  
If the debtor agrees with a creditor to give such creditor special privileges to vote on the  
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 scheme, which resulted in harm to other creditors, the court may set nullify this 
agreement of its own accord or at the request of one of the creditors.

Article (19) Extension of Voting Time  
The court may, at the request of the expert if the required approval to the scheme is not 
obtained, give the debtor a grace period not exceeding ten (10) working days to 
determine a new date for voting on the scheme or amending it to be presented to 
creditors.

Article (20) Ratification of the Scheme  
 
The co urt shall ascertain that the scheme includes that all creditors who are affected 
thereby shall obtain at least what they would have obtained if the funds of the debtor 
have been liquidated on the date of voting on the scheme subject to the discretion of th e 
court.  
The court shall issue a decision to ratify the scheme if all conditions stipulated in the 
above Articles are fulfilled and it shall be binding on all creditors.  
If the court decides to refuse the ratification of the scheme, it shall initiate insol vency 
proceedings and liquidation of the debtor's funds in accordance with the provisions of 
Title III of this Law by Decree.  
The expert shall notify the creditors of the decision of the court within five (5) working 
days as of the court's decision to rati fy or reject the scheme.  
 
Chapter Three Execution of Scheme

Article (21) Management of Scheme Execution   
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The expert shall work as a supervisor of the scheme during the execution period and he 
shall follow up the progress of the scheme and inform the court of  any default in its 
execution. The expert is entitled to obtain any data necessary for performing his duties.  
The appointment of the expert shall not affect the ability of the debtor to directly 
manage his businesses through the execution of the scheme of settlement of financial 
liabilities. In addition, this shall not exempt the debtor from any legal or contractual 
obligations arising from the practice of his businesses.

Article (22) Selling Properties of the Debtor  
The expert shall sell the properties of the debtor that are decided to be sold subject to the 
scheme execution for the best price that can be obtained in the light of the conditions 
prevailing the market on the date of selling. The sale amount or any other revenues due 
to the scheme execution sh all be deposited in the treasury of the court.

Article (23) Scheme Execution Report  
 
The expert shall prepare a report on the progress of the scheme execution every three (3) 
months and a copy shall be presented to the court. Any creditor may obtain a copy of 
that report.  
Procedures of settlement of financial liabilities shall be confidential and no one who has 
participated in the procedures of settlement of financial liabilities, or know thereof due 
to his job or profession, may disclose these procedur es to third parties unless subject to 
applicable legislations.   
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Article (24) Amendment of Scheme after Commencement of Execution  
If the expert deems it necessary to make amendments to the scheme during execution, 
which would make a change in the rights or ob ligations of any party, then he shall apply 
to the court for the approval of such amendments. The court shall, prior to deciding on 
the application, notify all creditors who can be affected by such amendments and any 
other creditors the court deems necessa ry to notify within five (5) working days as of the 
date of the expert's request in order to express their notes about the amendments 
required. This shall be within ten (10) working days as of the notification date. The court 
may issue a decision to permit  all or part of the amendment or to dismiss it, provided 
that the decision of the court shall take the interest of the creditors into consideration.  
 
Chapter Four Termination, Completion and Nullification of Financial 
Settlement Procedures

Article (25) Termi nation and Completion of Settlement Procedures  
 
The court shall decide to terminate the procedures of settlement of financial liabilities of 
the debtor in the following cases:  
If the court finds that reaching a settlement of financial liabilities is imposs ible.  
If it is impossible to apply the scheme because the debtor ceases to pay any of his debts 
in their due dates for a period that exceeds forty  (40) consecutive working days due to 
his incapacity to fulfil these debts.  
If the debtor requests the court to terminate the procedures of the scheme execution 
prior to the completion of settlement of financial liabilities with the creditors.  
If the period dedicated for the scheme execution expires and the completion of  
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 settlement of financial liabilities could not be done.  
If the debtor fails to execute the scheme.  
If all obligations stipulated in the scheme are fulfilled, the court shall issue a decision to 
complete the scheme execution at the request of the expert, debtor or any creditor. This 
decision s hall be published in two daily local newspapers one of which is issued in 
Arabic and the other is issued in English.

Article (26) Nullification of Scheme  
 
The court shall issue a decision to set aside the approved scheme if it is shown to the 
court that the debtor has escaped or attempted to escape to fulfil his obligations, such as 
concealing or destroying any part of his funds, providing false data about his debts, 
rights, funds or his disposition of his rights or funds.  
Any interested party may file a lawsuit for nullification in accordance with the provisions 
of Clause (1) of this Article within six (6) months as of the discovery of the action. In all 
events, the lawsuit shall not be admitted if it is submitted after two (2) years as of the 
date on whi ch the court's decision to approve the scheme has been issued.  
If the court ruled to nullify the scheme, the liability of any guarantor who guaranteed the 
execution of the scheme shall be discharged. Creditors shall not be obliged to return 
back any amount s they had received from the debtor in consideration of due debts prior 
to the judgment of nullification of the scheme.

Article (27) Effect of Nullification of Scheme  
The court shall order within its decision to nullify or terminate the scheme in accordance  
with the provisions of Clause (1) of article (25) and article (26) of this Law by Decree to  
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 initiate the insolvency of the debtor and liquidation of his assets subject to the 
provisions of Title III of this Law by Decree if it is proven to the court that such decision 
resulted in the debtor's cessation of payment of debts that are due on the date of the 
decision of nullification or termination of the scheme for a period that exceeds forty (40) 
executive working days due to his inability to pay such debts.  
 
Title Three : Insolvency of Debtor and Liquidation of his Assets  
Chapter One Initiating the Procedures of the Debtor's Insolvency

Article (28) Debtor's Submittal of Application  
 
The debtor shall submit an application to the court to commence the procedures o f his 
insolvency and liquidation of his assets if he ceases to pay any of his debts in their due 
dates for a period that exceeds fifty  (50) consecutive working days due to his incapacity 
to fulfil these debts.  
The value of the debts that obligate the debto r to submit the application referred to in 
Clause (1) of this Article shall be determined by a resolution issued by a Cabinet 
resolution upon the proposal of the Minister.  
The debtor shall combine the application with all documents stated in article (3) of  this 
Law by Decree.

Article (29) Right of Creditor to Submit the Application  
 
The creditor or a group of creditors whose credit is not less than two  hundred thousand 
(200,000) AED shall be entitled to submit an application to the court to commence the 
procedures of the debtor's insolvency and liquidation of assets subject to the provisions  
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 of this Title if the creditor has given the debtor a notice to fulfil the due debt  and the 
debtor did not pay within fifty ( 50) consecutive working days as of the date of the notice.  
The creditor shall submit the application to the court to commence open the procedures 
of insolvency and liquidation of assets combined with the following documents:  
Documents that prove the debt stating the amount thereof, the due dates and any 
relevant guarantees, if any.  
A copy of the notices referred to in Clause (1) of this Article.

Article (30) Amendment of Financial Values and Periods  
The Cabinet may, upon a recommendation from the Minister, issue a resolution to 
amend the financial values and periods referred to in Articles 28) and (29) of this Law by 
Decree.

Article (31) Payment of Fees, Costs and Expenses  
 
Subject to the provisions of Art icles (28) and (29) of this Law by Decree, the applicant 
shall pay the judicial fees.  
The court shall estimate the fees of the experts and the costs and expenses expected for 
the procedures of insolvency and liquidation of assets and shall notify the debto r of its 
estimation within a time not exceeding the day following the day of the application 
submittal.  
The applicant shall deposit at the court's treasury a cash amount or a bank guarantee on 
the date determined by the court to cover the fees of the trust ee and the costs and 
expenses expected for the procedures of insolvency and liquidation of assets.  
The court may, at the request of the applicant, postpone the deposit of the amount or  
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 bank guarantee stipulated in Clause (2) of this Article if sufficient f unds required to cover 
costs and expenses on the date of the application submittal are not available; provided 
that such funds shall be collected, prior to all other creditors, from the first amounts of 
money received by the debtor.  
If the court decides to  initiate the procedures of the debtor's insolvency and liquidation 
of assets during the procedures of settlement of financial liabilities, it may decide to 
deposit an additional cash or bank guarantee to cover the fees, costs and expenses of the 
trustee.  
 
Chapter Two Appointment of the Trustee and Practising his Duties

Article (32) Appointment of the Trustee  
 
The court shall, if decided to commence the procedures of the debtor's insolvency and 
liquidation of assets, appoint a trustee to manage such procedure s. 
If the debtor has been previously subject to the procedures of settlement of financial 
liabilities, the court may appoint the expert who had been appointed in accordance with 
the provisions of article (8) of this Law by Decree as a trustee of insolvency .

Article (33) Publication of Appointment Decision  
The trustee, within (5) five working days as of the date of the court's decision to 
commence the procedures of insolvency and liquidation of funds of the debtor, shall 
publish the decision of the court in t wo widely circulated local daily newspapers, one of 
which is issued in Arabic and the other in English language.

Article (34) Submittal and Examination of Claims   
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The trustee shall require the creditors to submit their claims within twenty (20) working 
days as of the date of publication of the court's decision in the two newspapers. No 
claims shall be considered after this date unless there is an excuse accepted by the 
trustee.  
The trustee shall make the final examination of the claims of credito rs and prepare a 
report on the financial position of the debtor and shall deliver it to the court within ten 
(10) working days as of the expiry date of the period determined in Clause (1) of this 
Article. The court may extend this period to one similar per iod.  
If the value of the claims is determined in a foreign currency, it shall be converted to the 
national currency at the exchange rate on the date of issuing the decision to commence 
the procedures of insolvency unless the creditor and debtor agree other wise.  
The court may, at the request of the trustee, assist him to perform his duty, including 
disbursing amounts to cover fees and expenses necessary for conducting the 
procedures.

Article (35) Admission of Claims and Granting Grace Period  
 
The court shall determine, after reviewing the report of the trustee, the claims to be 
admitted and accepted thereby.  
The court shall decide on the insolvency of the debtor and liquidation of his assets 
within fifteen (15) days as of receiving the trustee's report.  
The court may, upon a recommendation from the trustee and at the request of the 
debtor, prior to the initiating the liquidation of the debtor's assets, grant the debtor a 
grace period supervised by the trustee not exceeding (3) three months, renewable for  
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 similar periods, to amicably settle his debts with the creditors, provided that such action 
shall not harm the interest of creditors.  
Any creditor may appeal the decision issued by the court to give the debtor a grace 
period for amicable settlement before the Court of Appeal. Such appeal shall not result in 
the suspension of the procedures. The decision issued on the appeal shall be final.  
If the court decides to commence the procedures of insolvency and liquidation of the 
funds, all dates of all debts shal l be due, whether such debts are ordinary, secured or 
preferential.  
 
Chapter Three Liquidation of Assets

Article (36) Managing the Procedures of Liquidation of Funds  
 
If the court decides to commence the procedures of insolvency and liquidation of the 
funds,  the trustee shall manage the liquidation of all funds of the debtor except the funds 
that may be kept by the debtor subject to the provisions of this Law by Decree.  
The debtor shall disclose any properties he acquired or obtained for any reason after the 
court decided to commence the procedures of insolvency and liquidation of funds and 
the trustee shall include these properties to the funds of the debtor under liquidation.  
Without prejudice to Clause (2) of this Article, the trustee shall, unless the court decides 
otherwise, take legal or judicial procedures to claim any properties included in the 
financial liability of the debtor.  
The trustee may permit the debtor to complete any of his businesses or activities in order 
to sell his assets at the best possible price, provided that the period of this permission 
shall not exceed six (6) months. The trustee may extend this period, but it shall not 
exceed two (2) months if this will achieve the interests of creditors.   
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 The court may, at the request of the de btor or trustee, permit the debtor to keep any of 
his assets if the court deems that these assets are necessary to enable the debtor to 
follow up his job, profession or craft.  
The trustee shall manage the sale of the debtor's assets in an auction upon the approval 
of the court and under its supervision and control.  
The court may allow the trustee to sell some or all of the assets of the debtor in a way 
other than public auction subject to the conditions it sets.  
The trustee shall use the revenues of liquida tion of the debtor's assets to pay any claims 
on the debtor under the supervision of the court and the surplus shall be returned to the 
debtor.  
The proceeds of the sale shall be distributed to creditors subject to priority specified in 
article (42) of this  Law by Decree. If the sold assets are a security for one of the creditors, 
the trustee shall pay to the creditors according to their priority from the proceeds of 
selling such assets.

Article (37) Requesting Information  
The trustee may require information relevant to insolvency and liquidation from any 
person who has such information. This includes the current or previous spouse of the 
debtor or any other person who possesses properties or assets owned by the debtor or 
any other person who is indebted to th e debtor whom the trustee shall order to 
determine his debts due to the debtor.

Article (38) Right to Repayment  
 
Subject to article (8) of this Law by Decree, the expert shall ensure that publishing the  
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 decision to commencement of the procedures contains an  invitation to all interested 
parties who have a right in the funds of the debtor and that they shall submit a 
repayment request of movable and immovable funds owned thereby from the assets of 
the debtor. They shall submit the request within two months as of the date of publishing 
the decision stating the kind, nature and specifications of such funds and the nature of 
the right thereon.  
The expert may, based on an order of the court, repay the funds in the possession of the 
debtor to the owners thereof afte r validating their ownership.

Article (39) Assets Exempted from Liquidation Procedures  
The following shall not be included in the assets of the debtor that are subject to 
procedures of insolvency or liquidation:  
 
Retirement pension or social subsidy provided to the debtor.  
Necessary funds of the debtor determined by the court for the needs of living of the 
debtor and his dependants. The decision of the court may be objected to within five (5) 
working days as of the date of its issue. The court shall d ecide on the objection within 
five (5) working days and its decision may not be appealed.

Article (40) Selling Debtor's Domicile  
Without prejudice to the applicable legislations in the State, the trustee may apply to the 
court after the judgment of insolven cy and liquidation of the debtor's assets to obtain a 
decision to sell the house which the debtor takes as domicile under his legal disposition. 
Upon examining this request, the court shall take into consideration:  
  
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 The interest of the debtor's creditors.  
Whether the debtor has another house that can be used as domicile.  
The number of dependant family members of the debtor living with him at the house.  
The sufficiency of the price obtained from selling the house of the debtor to buy a 
suitable domicile for the debtor and his dependants subject to his social circumstances at 
the time of publishing the decision of insolvency and liquidation of his assets.  
Any other human or social aspects relevant to the debtor.  
That there are no legal or regulatory reasons preventing the disposal of the house of the 
debtor.

Article (41) Persons Prohibited from Purchasing Debtor's Assets  
 
The debtor may not provide a purchase offer, whether personally or through a purchase 
agent, to purchase all or some of the debtor's  assets of the debtor offered for sale.  
The following persons may not purchase the assets of the debtor unless the court 
approves this if it achieves an interest to creditors:  
The spouse of the debtor, one of his relatives by blood or marriage to the secon d degree.  
Any other person who was within the past two years prior to the decision to commence 
the procedures of insolvency and liquidation of the debtor's funds a partner, an 
employee, an accountant or an agent of the debtor.

Article (42) Order of Priority on Debtor's Assets  
 
The trustee shall, after the approval of the court, distribute the revenues of liquidation 
according to priority, provided that the creditors of guaranteed debts shall have priority  
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 to other creditors of preferred debts or ordi nary debts according to their guarantees.  
The following categories of debts shall be considered preferred debts and shall have 
priority to creditors of ordinary debts. This category of debts shall be paid subject to the 
following:  
Judicial fees and expense s in addition to the fees and expenses of the expert and the 
trustee.  
Costs or expenses disbursed by virtue of a decision issued by the court to serve the 
common interest of creditors to maintain and liquidate the assets of the debtor.  
End of service gratu ity, due wages of workers and employees of the debtor.  
Debts of spousal maintenance due by the debtor subject to a judgment issued by a 
competent court.  
Amounts due to governmental entities.

Article (43) Distribution of Revenues of Selling Debtor's Assets  
 
The trustee may distribute the revenues of liquidation after each sale transaction or after 
aggregating the funds of total sale transactions subject to the provisions of article (42) of 
this Law by Decree.  
The trustee may, after each sale transaction, subm it a distribution list to the court for 
ratification.  
The creditor shall receive his share in the proceeds of distribution at the place where the 
trustee performs his duty unless the trustee and the creditor agree otherwise.  
Shares of debts that were not t otally accepted and debts that are objected to according to 
the provisions of this Law by Decree shall be detained and kept at the treasury of the 
court until the final decision.   
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 Proceeds of amounts arising from the sale of the funds securing his debt shal l be paid to 
the creditor of a guaranteed debt. If the mortgaged assets are not sufficient to fulfil the 
full guaranteed debt or preferential debt, the unpaid amount of the debt shall be deemed 
an ordinary debt.  
The trustee shall deliver to the debtor any surplus amounts upon liquidation after 
fulfilling all his liabilities.  
If a creditor refuses to receive his debt, or if he is absent, or if it is difficult to recognise his 
residence, the debt shall be deposited at the court treasury and the deposit receip t shall 
be deemed a clearance.

Article (44) Procedures in Specific Conditions  
 
If the debtor hinders the procedures of insolvency and liquidation of assets in a way that 
prevents the trustee to perform his duties subject to the provisions of this Law by Decree, 
the trustee may seek the court to issue an order on a petition to take any appropriate 
procedure against the debtor.  
If it is shown to the court, after the issuance of the insolvency and liquidation of the 
funds of the debtor, that there are any un disclosed funds that belong to the debtor, the 
court is entitled to add such funds to the funds of the debtor under liquidation.

Article (45) The Report of Liquidation Procedures Progress  
The trustee shall inform the court and the debtor every month of the progress of the 
proceedings of insolvency and liquidation.  
 
Chapter Four Completion of Insolvency and Liquidation Procedures   
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Article (46) Closure of Insolvency and Liquidation Procedures  
 
After completion of the final distribution of the debtor's funds to cr editors, the court shall 
issue a decision to close all procedures of liquidation, provided that the decision shall 
include a list of creditors whose debts are accepted, their value and what had been 
fulfilled. The court shall order the trustee to publish t hat decision in two widely 
circulated local daily newspapers, one of which is issued in Arabic and the other is issued 
in English.  
The trustee shall return all documents in his custody to the debtor after the completion 
of the procedures and performing his  works.  
The court may, at the request of the debtor or trustee, issue a judgment at any time after 
the decision to commence the insolvency procedures was issued, to end the insolvency 
and liquidation procedures if the court discovers the following:  
That the reasons that led to commencing the insolvency procedures ceased to appear.  
That the proceeds of the debtor's assets are sufficient to pay the rights of creditors.  
All effects of insolvency stipulated in this Law by Decree shall be cease d 
accordingly.After the decision to close the procedures of insolvency and liquidation is 
issued, any creditor whose debt has been accepted by the court and was not fully 
fulfilled is entitled to execute on the funds of the debtor to obtain the remainder o f his 
debt. Acceptance of the debt referred to in article (35) of this Law by Decree shall be 
deemed a final judgment concerning this execution.  
If the proceeds of the debtor's funds are not sufficient to pay the rights of creditors, the 
court shall issue a judgment declaring the insolvency of the debtor and termination of 
the procedures of insolvency and liquidation.  
  
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 Chapter Five Measures Taken Against Debtor

Article (47)  
The court is entitled to take necessary measures against the debtor if he committed or 
starts to commit any of the following acts or dispositions:  
 
Escaping outside the State to avoid or delay the payment of his debts, or avoid, delay or 
prevent the procedures of insolvency and liquidation of his assets.  
Disposing of any of his assets with the aim to prevent the trustee from possessing them 
or to delay his possession thereof.  
Concealing or destroying any of his assets, documents or other relevant information that 
creditors may benefit from.  
Transferring any properties under his p ossession of which value exceeds five thousand 
(5,000) AED without the consent of the trustee.  
Not attending before the court after being notified to attend or not executing its 
decisions without providing any acceptable excuse.  
 
Chapter Six Insolvency of the Estate of a Deceased Debtor

Article (48)  
The procedures of the declaration of insolvency and liquidation of the debtor's assets as 
stipulated in this Law by Decree shall apply to the deceased debtor and the following 
shall be taken into consideration:  
 
The notification of the application for the commencement of procedures of insolvency, 
in the event of the debtor's death, shall be served to the last domicile of the deceased 
debtor without the need to specify the heirs.   
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 Heirs of the debtor whose insolvency  is declared shall replace the debtor in the 
procedures of insolvency and liquidation of assets within the limits of the estate.

Article (49)  
The trustee shall notify the heirs of the deceased to nominate a representative thereof in 
the proceedings of insol vency and liquidation of assets. If they do not agree upon their 
representative within ten (10) working days as of the date of the notification, the court 
shall, at the request of the trustee, assign one of them or any other person to achieve this 
purpose.  The court may remove the representative of the heirs and appoint another one.  
 
Chapter Seven Effects of Insolvency

Article (50) Dispositions of Debtor after Commencing the Procedures  
The decision of the court to open the proceedings of insolvency and liquidation of funds 
of the debtor shall result in the following:  
 
Debts of the debtor shall be due and payable.  
Dispositions made by the debtor of his assets, whether for a consideration or not, shall 
not be valid unless the court decides otherwise. The c ourt may order a third party to 
repay any funds of the debtor or issue any other order the court deems as appropriate to 
preserve the rights of creditors. In all events, the court shall hear the testimonies of the 
parties to the disposition prior to decidi ng the nullity or validity of that disposition.  
Recognition of any debt to the debtor's creditors shall not be enforced.  
The debtor shall be prevented to manage his businesses and dispose his funds and 
properties. The debtor may not make any payments that exceed five thousand (5,000) 
AED without the consent of the trustee as of the date of opening the proceedings.   
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 Preventing the debtor from disposing of his funds shall not include the costs of his living 
or his dependants subject to the decision of the cour t or the payment through set -off to 
fulfil mutual obligations that have been created prior to the decision to commence the 
procedures of insolvency and liquidation of funds, unless the court decides otherwise.  
The debtor may not provide any personal securi ties or guarantees on his funds unless 
upon a prior consent from the court.

Article (51) Suspension of Procedures  
 
During the procedures of insolvency and liquidation of assets, no lawsuits may be filed 
or proceeded, and no legal or judicial procedures may be taken against the debtor in 
events other than those permitted in this Law by Decree.  
The decision of the court to commence the procedures of insolvency and liquidation of 
assets shall result in the suspension of all judicial execution procedures against  the 
debtor's assets.  
Notwithstanding Clauses (1) and (2) of this Article, creditors of guaranteed or 
preferential debts are entitled to execute on their guarantees whenever their debts are 
due after they obtain a permission from the court. The court shall decide on giving such 
permission within ten (10) working days as of the date of requesting the permission. 
Deciding on that permission shall not need a notification or exchange of briefs.  
The decision issued by the court to refuse the permission may be appealed before the 
Court of Appeal. Such appeal shall result in the suspension of the procedures of 
insolvency and liquidation of funds. The decision issued on the appeal shall be final.

Article (52) Interests and Guarantees Provided   
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 The decision to com mence the procedures of insolvency and liquidation of assets shall 
result in the following:  
 
Due legal or contractual interests on the debtor shall be suspended, including the due 
interest or indemnity for late payment.  
Any judicial procedure against any person that gave the debtor a personal guarantee or 
transferred his funds as a guarantee for the liabilities of the debtor shall be suspended 
until a judgment to liquidate the debtor's assets is issued within the limits of that 
guarantee.

Article (53) Enforcement of Contracts  
 
The decision to commence the procedures of insolvency and liquidation of assets shall 
not result in the avoidance or termination of a valid contract between the debtor and a 
third party. The party contracting with the debto r shall fulfil its contractual obligations 
unless the creditor claims non -execution or the avoidance of the contract due to the 
debtor's failure to fulfil his obligations prior to the issuance of the court's decision to 
commence the insolvency procedures, or if it is proven to the trustee that the debtor is 
unable to fulfil his contractual obligations stipulated in said contract. The court may in 
this event, at the request of the trustee or any other relevant person, issue a judgment 
avoiding the contract i f it is necessary for the protection of the debtor's assets or if it 
achieves an interest for all creditors and does not harm the interests of the party 
contracting with the debtor.  
The trustee shall, upon requesting the enforcement of any contract, ensure  that debtor 
has the necessary funds to fulfil his obligations stipulated in that contract and to pay any  
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 amount that the debtor should pay to the contracting party due to an enforceable 
contract, unless the contracting party gives the debtor a grace perio d for payment.

Article (54) Prohibiting Dispositions and Entry in the Register  
Subject to article (50) of this Law by Decree, declaring insolvency and liquidation of the 
debtor's assets shall result in the following:  
 
Preventing the debtor to obtain a new l oan or finance for three (3) years as of the date of 
the judgment of insolvency declaration.  
Preventing the debtor to enter into obligations, whether for a consideration or not, 
except what is required to fulfil his necessary needs and his dependants for t hree (3) 
years starting on the date of the judgment of the debtor's insolvency and liquidation of 
assets; unless the court permits the debtor to do so by virtue of an order on a petition 
submitted by the debtor.  
Entering the names of debtors, against whom judgments to declare their insolvency and 
liquidation of their assets are issued, in the special register. A Cabinet resolution shall 
determine the form of the register, the data to be included and the competent entity 
regulating that register in addition to other relevant terms and conditions.  
 
 
 
 
Chapter Eight Rehabilitation of the Debtor Whose Insolvency is Declared

Article (55) Lapse of Time  
Unless the provisions of this Chapter stipulate otherwise, the rights from which the  
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 debtor has been deprived according to the provisions of this Law by Decree shall be 
recovered by any of the following:  
 
The lapse of three years as of the date of the completion of the debtor's insolvency and 
liquidation of assets.  
The lapse of two years as of the date of  the completion of the procedures of the debtor's 
insolvency and liquidation of assets if the debtor has fulfilled (50%) of his debts.  
The lapse of one year as of the date of the completion of the procedures of the debtor's 
insolvency and liquidation of as sets if the debtor has fulfilled (75%) of his debts.

Article (56) Rehabilitation Due to Debt Fulfilment  
The debtor whose insolvency was declared shall be rehabilitated, even if the time 
stipulated in article (55) of this Law by Decree did not lapse, if the debtor fulfils all of his 
debts previously accepted by the court prior to ruling the declaration of insolvency and 
liquidation.

Article (57) Settlement and Discharge  
The debtor whose insolvency was declared may be rehabilitated, even if the time 
stipula ted in article (55) of this Law by Decree did not lapse, in the following events:  
 
If the debtor concludes a settlement with all his creditors and abides by such settlement.  
If the debtor proves that creditors have discharged him of all debts that were due  thereby 
after the court's decision to declare insolvency and liquidation.

Article (58) Rehabilitation of Deceased Debtor   
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 The debtor whose insolvency was declared shall be rehabilitated after his death at the 
request of the heirs. Times stipulated in Articl e (55) of this Law by Decree shall be 
calculated as of the date of the judgment of his insolvency and liquidation of assets.

Article (59) Rehabilitation Application  
The application for rehabilitation shall be submitted with supporting documents to the 
court  that issued the judgment of insolvency and liquidation declaration and the court 
shall notify the creditors whose debts were accepted thereby of the application for 
rehabilitation.

Article (60) Objection to the Rehabilitation Application  
 
Any creditor whose debts were accepted by the court and did not collect his right shall 
be entitled to object the rehabilitation application within fifteen (15) working days as of 
the date of being notified. The objection shall be made via an application submi tted to 
the court accompanied with the supporting documents.  
The court shall, after the lapse of time stipulated in Clause (1) of this Article, notify 
creditors who submitted their objections to the rehabilitation application of the date of 
the hearing sch eduled to consider the request.  
The court shall decide on the rehabilitation application by issuing a judgment that shall 
be appealable before the Court of Appeal.  
If the rehabilitation application is dismissed, it may not be submitted again unless after 
the lapse of six (6) months as of the date of dismissal.  
 
Title Four : Provisions Dedicated for the Expert and Trustee   
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Article (61) Replacement  
The court may at any time replace the expert or the trustee or appoint additional experts 
or trustees.  
The court may  replace the expert or trustee at the request of the creditor or debtor if it is 
proven to the court that his appointment may harm the interests of creditors or debtor. 
However, the request shall not suspend the procedures.  
The expert or trustee may reques t the court to relieve him of his duties and the court is 
entitled to appoint an alternative. The court may also determine the fees of the expert or 
trustee relieved for his services.  
The appointment of the alternative expert or trustee shall be through th e same 
appointment procedures stipulated by the provisions of this Law by Decree. He shall, 
within (5) working days as of the date on which he is notified of the appointment 
decision, publish the decision of his appointment in two widely circulated local d aily 
newspapers, one of which is issued in Arabic and the other is issued in English. The 
replaced expert or trustee shall cooperate as much as possible to enable the alternative 
expert or trustee to undertake his duties.  
The court may evaluate the phase o f the procedures under consideration at the time of 
replacing the expert or trustee and it may grant the new expert or trustee a sufficient 
period to complete the procedures.

Article (62) Fees  
The court shall determine the fees of the expert or trustee appo inted and such fees shall 
be paid from the amounts or bank guarantees deposited at the treasury of the court. If 
these amounts are not sufficient to pay all the fees, the remainder amount shall be paid 
according to the provisions of article (42) of this La w by Decree.   
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Article (63) Fees collection  
 
The expert or trustee shall collect his fees, allowances of costs and expenses incurred 
from the funds of the debtor. Subject to a decision issued by court, a payment may be 
disbursed from such fees and expenses.  
If the funds of the debtor are not sufficient to pay the fees, expenses and costs, the expert 
or trustee is entitled to apply to the court to pay his dues from the treasury of the court. If 
any dues are paid from the treasury of the court, these amounts shall be recovered prior 
to all creditors from the first amounts entering into the funds of the debtor.  
Each stakeholder may submit a grievance to the court against the estimation of the fees, 
expenses and costs of the expert and trustee. Such grievance shall not suspend the 
procedures and the court shall decide on the grievance within five (5) working days as of 
the date of its submittal and its decision cannot be appealed by any way of appeal.  
 
Title Five : Penalties

Article (64)  
Penalties stipul ated in this Law by Decree shall not prejudice any severer penalty 
stipulated by any other law.

Article (65)  
Any creditor who commits any of the following acts shall be punished with 
imprisonment and a fine not less than ten thousand (10,000) AED and not ex ceeding 
one hundred thousand (100,000) AED or with one of these two punishments:   
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If the creditor submits a claim relevant to a false or fake debt against the debtor.  
If the creditor increases his debts due by the debtor in an illegal way.  
If the creditor votes in any meetings on decisions relevant to the settlement of financial 
liabilities of the debtor and he knows that he is legally prohibited.  
If the creditor, after the decision of the court to initiate the procedures of insolvency and 
liquidation of fu nds, agreed with the debtor to take special privileges in a way that harms 
other creditors despite being aware of that matter.

Article (66)  
A debtor shall be punished with imprisonment for a period not exceeding two years and 
a fine not less than twenty tho usand (20,000) AED and not exceeding sixty thousand 
(60,000) AED or one of these two punishments if the debtor declared his insolvency and 
has been proved that declaration of insolvency caused a loss for his creditors due to 
committing one of the following  acts:  
 
If the debtor has spent big amounts of money on speculations that are not required for 
his usual businesses or on purchasing services, commodities or items of personal or 
domestic use that are not suitable for his unstable financial position, or if he performs 
gambling while he is aware of the potential harms to his creditors.  
If the debtor paid the debt of one creditor in order to harm other creditors within the six 
(6) months prior to the submittal of his application to settle his l iabilities or declare his 
insolvency.  
If the debtor disposes of his funds in a bad faith for a price that is less than the market or 
seeks harmful methods to harm his creditors in order to delay insolvency declaration  
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 and liquidation of his funds.  
If the d ebtor paid any debt or disposed of any funds while he was aware that such action 
violated the conditions of the scheme.  
 
Title Six: Final Provisions

Article (67)  
If the court decides to commence the procedures of settlement of financial liabilities or 
procee dings of insolvency and liquidation of funds, the court shall order, upon its 
discretion or based on the request of the debtor, the suspension of any penal procedures 
if such procedures arise due to cases of issuing a bounced cheque for cheques made by 
the debtor before the request to commence the procedures of settlement of financial 
liabilities or proceedings of insolvency and liquidation of funds.  
If the court decides to suspend the penal procedures according to the provisions of 
Clause (1) of this Artic le, the suspension shall continue until the completion or 
nullification of the procedures of settlement of financial liabilities or until the court 
issues a decision to declare the debtor's insolvency, as the case may be. The creditor who 
holds the bounced  cheque shall be one of the creditors and his debt shall become a part 
of the total debts of the debtor.  
If the debtor obtains a decision from the court to settle his liability towards the creditor 
holding the bounced cheque within any phase of the procedu res of settlement of 
financial liabilities or proceedings of insolvency and liquidation of assets, the debtor may 
apply to the competent court to hear the criminal lawsuit according to the provisions of 
article (401) of the Penal Code in order to issue a d ecision of lapse or suspension of the 
criminal action, as the case may be.  
  
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Article (68)  
No appeal may be submitted against any judgment or decision issued by the court 
during the procedures of the settlement of financial liabilities or the procedures of 
insolvency declaration and liquidation of funds of the debtor, except for the events 
explicitly stipulated in this Law by Decree.

Article (69)  
Any provision contrary to or contravening the provisions of this Law by Decree shall be 
repealed.

Article (70) Publication and Enforcement of the Law by Decree  
This Law by Decree shall be published in the Official Gazette and shall come into force 
three months after the date of its publication.  
                           
  
 
 
Signed                   
Khalifa Bin Zayed Al Nahyan    
President of the United Arab Emirates  
 
 
 
 
Issued by Us at the Presidential Palace in Abu Dhabi:   
Federal Law by Decree No. (19) of 2019 Concerning Insolvency  
 41 
 Dated: 28 Dhul -Hijjah 1440 H  
Corresponding to: 29 August 2019 AD