Federal Decree-Law No. (51) of 2023 Promulgating the Financial and Bankruptcy Law (economy and business law)

Article (137 ) 
Disposing of Debtor's Assets During Preliminary Proceedings Period  
1. The debtor's assets may not be sold during the period of preliminary proceedings 
extending from the date of submitting the application until a decision is issued thereon. 
However, the Bankruptcy Court may, upon motion of the Trustee, the d ebtor or any of 
the creditors, authorize the sale of perishable items or items whose maintenance 
requires heavy expenses. It is also permissible to authorize the sale of the debtor's assets 
to cover the bankruptcy expenses.  
2. In the circumstances set forth in Clause (1 ) of this Article, the sale shall be made in the 
manner determined by the Bankruptcy Court, and the court shall request the Unit, where 
the debtor is supervised by the regulatory authority, to provide it with its opinion in this regard.  
  
Articl e (138 ) 
Repayment of Debts to Secured Creditors 
1. The Bankruptcy Court may, based on the Trustee's proposal, order, when necessary, that the first amounts collected for the bankruptcy account be used to repay the debts of 
creditors who have a lien over the d ebtor's assets and whose names are included in the 
final list of undisputed debts, within the limits of the amount of assets serving as guarantees for the debt on the date of payment of those amounts.   
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 2. If there is a dispute over debts, it may not be repaid until the dispute is adjudicated by a 
final judgment, and the Bankruptcy Court has jurisdiction to decide these disputes.  
  
Article (139 ) 
Lien Created in favor of Government  
The lien created in favor of the government shall not include taxes of all types e xcept the tax 
due on the debtor before the issuance of the decision to initiate bankruptcy proceedings.  
  
Chapter Four  
Contracts  
Article (140 ) 
Lease agreement  
If the debtor is a lessee of the property in which it conducts business, the lease agreement 
shall continue to be effective, and any condition to the contrary shall be void.  
  
Article (141 ) 
Termination of Lease agreement  
Notwithstanding the provisions of article (140)  of this Law, the Trustee may, within sixty 
(60) days following the date of issuance  of the decision to initiate bankruptcy proceedings, 
decide to terminate the lease agreement in respect of the property in which the debtor practices its business, after obtaining permission from the Bankruptcy Court. In this case, the 
Trustee shall notify  the lessor of this decision within the aforementioned period.  
  
  
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 Article (142 )  
Lessor's Lien  
1. In the event of termination of a lease agreement in accordance with the provisions of 
this Law, the lessor that leases out a property to the debtor shall have a lien for the two 
years preceding the issuance of the decision to initiate Bankruptcy Proceedings as well as 
the then current year, in respect of all matters in relation to the performance of the lease 
agreement and any compensation that may be awarded.  
2. If the movables in the leased property are transferred or relocated without terminating 
the lease agreement, the lessor may exercise its lien as stipulated in Clause (1) of this 
Article, and in addition, he shall have a lien for another year starting from the  end of the 
then current year during which the decision to initiate bankruptcy proceedings is issued.  
  
Article (143 ) 
Continuation of Lease  
1. The Trustee decides to continue the lease, and he shall pay the overdue rent, without 
prejudice to the lessor's right to request termination of the lease agreement due to 
abstention or delay in respect of paying the rent. The lessor may request the Bankruptcy 
Court to terminate the lease, unless the Trustee provides sufficient security to pay the 
rent on the due dates.  
2. The Trustee may, after obtaining permission from the Bankruptcy Court, sublease the 
property or assign the lease, unless the debtor is prohibited from doing so by virtue of the lease agreement or under the legislation regulating the lease relationship applicable 
to the leased property.  
  
  
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 Article (144 ) 
Employment Contracts  
1. If a decision is issued to initiate bankruptcy proceedings for the employer, the contracts 
of the debtor's employees may not be terminated unless it is decided not to continue the 
debtor' s business. In the event of termination of the employment contract, the employee 
may claim for compensation, unless the Bankruptcy Court decides otherwise to protect 
the interest of the debtor and creditors while taking into account the interest of the 
employee.  
2. If it is decided to continue the debtor's business, the Trustee shall pay wages and salaries 
regularly on the agreed upon date if the debtor's assets are sufficient therefor.  
  
Article (145 ) 
Contracts with Suppliers of Goods and Service Providers  
If it is decided to continue the debtor's business, the Trustee shall pay the necessary amounts 
to the suppliers of goods and service providers for the sake of the continuation of the 
debtor's business regularly at the time agreed upon in the contract, if the debtor's assets are 
sufficient therefor.  
  
Article (146 ) 
Wages and Salaries Due Prior to Issuance of Decision to Initiate the 
Proceedings  
1. The Trustee shall, not later than the ten (10) days following the issuance of a decision to 
initiate bankruptcy proc eedings, and despite the presence of any other debt, use 
whatever amounts in his possession to pay the wages and salaries due before the  
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 issuance of the decision to initiate the proceedings. If the Trustee does not have the 
amounts necessary to pay these d ebts, the wages and salaries shall be paid from the first 
amounts he receives, even if there are other debts that precede the same in the rank of 
lien.  
2. In accordance with Clause (1 ) of this Article, the amounts in excess of the foregoing, due 
to the aforem entioned categories shall have the legally -prescribed lien rank.  
  
Article (147 ) 
Assignment of Existing Contracts  
1. If the Trustee is of the opinion that the assignment of an existing contract largely would 
serve the best interest of the bankruptcy estate, he shall submit an application to the 
Bankruptcy Court for approval to assign the contract, and shall attach with the 
application the contract and the justifications upon which the assignment is based. 
Along with the application, the Trustee shall provide e vidence of the ability of the 
assignee to perform the contract.  
2. The other party to the contract may object to the application referred to in Clause (1 ) of 
this Article based on the absence of evidence to prove the ability of the assignee to 
perform the con tract or that the assignment of the contract would violate the provisions 
of this Article. If the existing contract is assigned, the assignment shall include all issues of the contract. The assignee shall fulfill the contractual obligations.  
3. The Bankruptcy  Court shall approve the application to assign the existing contract in the 
following cases:  
a. If the contract assignment would serve the best interest of the bankruptcy estate;  
b. Where the other party to the contract furnishes an objection in accordance with the 
provisions of Clause (2 ) of this Article, and the Trustee proves, before the Bankruptcy  
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 Court, the ability of the assignee to perform the contract; or  
c. Where the assignment would not result great injustice to the other contracting party.  
4. Upon assignment  of an existing contract, the assignee shall bear the debtor's liability 
arising from the contract, and the bankruptcy estate shall be released from all obligations 
stipulated in the contract.  
5. The Trustee may assign the contract in accordance with the prov isions of this Article 
even if the contract prohibits any such assignment.  
6. The Trustee may not transfer the existing contract if it is:  
a. A contract to borrow or grant credit to the debtor.  
b. A contract between the debtor and a party where and the personality of the debtor is 
a core element of the contract.  
 
Article (148)  
Debtor's Depositions that are Unenforceable vis- à-vis Creditors 
1. The following actions may not be invoked vis -à-vis the creditors, if they are carried out 
by the debtor in respect of whom a de cision is issued to initiate bankruptcy proceedings 
over its debts during the six (6 ) months preceding the cessation of payment date:  
a. Donations or gifts, except for small gifts that are usually accepted according to the customary practices.  
b. Any transactions in which the debtor's obligations are significantly unbalanced with 
the obligations of the other contracting party, whether these obligations are in kind 
or in cash.  
c. Repayment of debts before the maturity date, regardless of the method of repayment, or in a manner different from that usually followed to repay that type of 
debt. The creation of consideration for payment of a negotiable instrument that has  
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 not yet matured is considered to be considered premature repayment, unless there 
are commercial consid erations that justify the same.  
d. Repayment of payable debts with considerations other than the agreed -upon ones. 
Repayment through negotiable instruments or bank transfer is considered the same 
as cash repayment, unless there are commercial considerations t hat justify the same.  
e. Arrangement of any type of new guarantee on the debtor's assets to guarantee the 
repayment of a previous debt, unless there are commercial considerations that justify 
the same.  
2. Notwithstanding the actions referred to in Clause (1) of this Article, the Bankruptcy 
Court may order that any disposition carried out by the debtor during the 
aforementioned period is not enforceable if the disposition was harmful to the creditors, and the other party, with which the disposition was executed, k new or should have 
known at the time of its exercise that the debtor had ceased to pay its debts or was in a state of financial deficit.  
3. The enforceability of the disposition may not be invoked vis -à-vis the creditors if the 
debtor against which a decision  was issued to initiate bankruptcy proceedings regarding 
its debts carries out any of the acts mentioned in Clause (1 ) of this Article, during the two 
years preceding the cessation of payment date if these depositions were executed between the debtor and a n insider or a related party.  
 
Article (149 ) 
Unenforceable Registration of Mortgage or Lien over Debtor's Assets  
1. A court may order that the registration of the mortgage or lien over the assets of the 
debtor in respect of whose debts a decision has been issued to initiate bankruptcy 
proceedings regarding its debts vis -à-vis the creditors be invalid, if the registration is  
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 made after the cessation of payment date, provided that it is proven that the creditor 
knows that the debtor has ceased to pay its debts.  
2. The provision of Clause (1) of this Article shall not apply if the mortgage and lien rights 
were registered for the purpose of determining an existing debt secured by the same 
rights over the same assets, and these rights were registered as security for th e existing 
debt at a date prior to the cessation of payment date, or where the registration was 
carried out in implementation of a ratified contract at a date prior to the cessation of 
payment date.  
3. The creditor who holds the next mortgage to the mortgage decided unenforceable takes the rank of this mortgage. However, he is not given from the price resulting from the sale 
of the mortgaged asset other than what he would have obtained assuming the previous mortgage was enforceable, and the difference goes to the group of creditors.  
  
Article (150 ) 
Dismissal and Inadmissibility of Unenforceability Action  
1. The Bankruptcy Court may order to dismiss the actions referred to in Articles (148)  and 
(149) of this Law if it is convinced that the debtor has acted in good faith and with the 
aim of carrying out its business and that when it did so there were reasons to believe that the action could be beneficial to its business.  
2. The action filed on the basis of Articles (148) and (149) of this Law shall not be heard 
after on e year following the date of service the decision to initiate the proceedings.  
  
Article (151 )  
Action for Unenforceability of Debtor's Acts Detrimental to Creditors  
The Trustee may request that the debtor's acts occurring before the issuance of the decisi on  
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 to initiate bankruptcy proceedings to the detriment of creditors be invalidated, in 
accordance with the provisions of the Civil Transactions Law regarding the claim of non -enforcement of the acts. The judgment invalidating the acts shall result in them not 
being enforceable vis -à-vis all creditors, whether their rights arose before or after the 
performance of the disposition.  
  
Article (152 ) 
Effect of Judgment Invalidating the Debtor's Acts vis -à-vis Creditors  
1. If the debtor's acts are ordered invalidated  vis-à-vis the creditors, the party, with which 
the disposition was executed, shall refund to the debtor or the Trustee, as the case may 
be, the amounts that he obtained from the debtor under these acts or the value of the 
item at the time of its receipt i f it is not possible to return it in kind. He shall further pay 
the interest or benefits resulting therefrom of the item he has received from the date of 
receipt.  
2. The party, with which the disposition was executed, shall have the right to recover the consi deration he provided to the debtor, if this particular consideration is found in the 
management of the debtor's assets. If there is none, the party, with which the disposition 
was executed, shall have the right to demand from the debtor and the creditors t he 
benefit that accrued thereto from the disposition, and to engage in the proceedings as an ordinary creditor regarding the amount in excess thereof.  
  
Article (153 ) 
Enabling the Debtor to Pay Salaries and Periodic Installments  
If the debtor has an obligation to pay a periodic salary for life or pay installments, and the same is in exchange for compensation, the Bankruptcy Court may, upon motion of the  
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 creditor, order, after hearing the opinion of the Trustee and within ten (10) days from the 
date of submi tting the application, that a sufficient amount be set aside to pay the 
aforementioned salaries and installments, with an explanation of the payment method.  
  
Article (154 ) 
Involvement of Creditor Whose Debt Is Contingent upon Resolutory 
Condition  
The creditor, whose debt is contingent upon a resolutory condition, shall only be involved in 
the proceedings where it provides a Surety or sufficient security. For the creditor whose debt 
is contingent upon a suspensive condition, its share in the distributions s hall be set aside 
until the position of its debt becomes clear.  
  
Article (155 ) 
Determination of Living Expenses for the Debtor  
The Bankruptcy Court may, upon motion of the debtor or its dependents and after hearing 
the Trustee's statements, determine living expenses for the debtor in respect of whose debt a 
decision to initiate bankruptcy proceedings has been issued, or may decide to entrust the 
management of its business and assets to a Trustee. The Court may also increase or decrease 
the living expenses amount or order its cancellation, as the case may be.  
 
Article (156 ) 
New and Existing Actions Against the Debtor  
1. After the issuance of the decision to initiate bankruptcy proceedings, no case may be filed against the debtor or proceed, except for the follo wing cases:   
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 a. Claims concerning the assets and dispositions not included in the matters of which 
the debtor is prevented from disposing.  
b. Cases relating to the proceedings stipulated in this Law, in which the debtor is 
permitted by law to institute or litigat e. 
c. Criminal cases.  
2. If the debtor files a criminal case or there is a criminal case filed against it or a case in 
relation to its person or personal status, the Trustee shall be joined therein if the same 
includes financial claims.  
3. The court may authorize t he joining of the debtor in cases in relation to bankruptcy 
proceedings, and it may also authorize the joining of the creditor in these cases if it has a 
special interest therein.  
  
Article (157 ) 
POA Issued to or by the Debtor and the Corporate Management  
1. The power of attorney shall be terminated upon the issuance of a decision to initiate bankruptcy proceedings for the attorney -in-fact or the principal. However, the power of 
attorney shall not be terminated upon the issuance of a decision to initiate bankr uptcy 
proceedings if the attorney -in-fact or a third party has an interest therein.  
2. Once the decision to initiate bankruptcy proceedings is issued, the debtor may not 
become a director or member of the board of directors of any company.  
  
Article (158 ) 
Extinguishment of Due Dates of Debts  
1. The issuance of a decision to initiate bankruptcy proceedings shall result in the extinguishment of due dates of monetary debts owed by the debtor, whether they are  
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 ordinary debts or secured debts. The interest on ordinary  debts shall also cease to apply 
to creditors only.  
2. A claim may only be made for interest on debts secured by mortgage or lien from the 
amounts resulting from the sale of the assets securing such debts. The principal of the 
debt shall be settled first, fol lowed by the interests due before the issuance of the 
decision to initiate bankruptcy proceedings, and finally the interest due after its issuance.  
3. If the debts are denominated in a currency other than the UAE dirham, they shall be 
converted into the UAE d irham according to the official exchange rate on the day the 
decision to initiate bankruptcy proceedings is issued.  
  
Article (159 ) 
Deducting Interests from Deferred Debt  
The Bankruptcy Court may deduct from the deferred debt, for which no interest is stip ulated, 
an amount equivalent to the legal interest for the period following the date of issuance of a decision to initiate bankruptcy proceedings until the date the debt becomes due.  
  
Chapter Five  
Debtor's Engagement in New Business  
Article (160 ) 
Conditio ns for Debtor's Engagement in New Business  
Notwithstanding article (157.2) of this Law, the debtor may, with the permission of the 
Bankruptcy Court, engage in new business using other than bankruptcy estate, provided that the same does not result in damage  to the creditors. Creditors whose debts arise in 
connection with this previous business shall take precedence in respect of recovering their  
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 rights from its assets.  
  
Article (161 ) 
Debtor's Payment of Negotiable Instrument's Value After Cessation of 
Payme nt Date  
1. If a debtor pays the value of a negotiable instrument after the cessation of payment date 
and before the issuance of a decision to initiate bankruptcy proceedings, the amount paid may not be recovered from the instrument bearer. Rather, the drawer or the person, 
for whose benefit the negotiable instrument is withdrawn shall refund the value paid to 
the Trustee or the debtor, as the case may be, if, at the time of issuing the negotiable 
instrument, he is aware of the debtor's cessation of payment.  
2. The refund obligation in the case of a promissory note shall fall on the part of the first 
endorser, if, at the time of obtaining the promissory note, he is aware of the debtor's 
cessation of payment.  
  
Chapter Six 
Announcement of Bankruptcy Judgment and its  Effects  
Article (162 ) 
Announcement of Bankruptcy Judgment  
1. Bankruptcy shall only be established under a judgment declaring bankruptcy.  
2. The Bankruptcy Department shall, within ten (10) days following the date of issuance of 
the bankruptcy judgment, announce  and record the operative part of judgment in the 
Bankruptcy Register and the Commercial Register, and the debtor may be instructed to 
disclose the same at its business headquarters and on its website, if any.   
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Article (163 ) 
Effects of Bankruptcy Judgment  
Other than the provisions contained in this Chapter, the effects resulting from the issuance 
of the decision to initiate bankruptcy proceedings in accordance with this Law shall remain 
effective with respect to the bankrupt, and the common provisions cont ained in Chapter IV 
of this Law shall apply to its bankruptcy.  
  
Article (164 ) 
Deprivation from Exercising Political Rights  
A person, against whom a final judgment has been issued for committing any of the crimes 
of fraudulent bankruptcy shall be temporarily deprived of exercising political rights, 
membership in the Federal National Council, assuming a public position or mission and 
being a member of the board of directors of sports federations and clubs or a director or member of the board of directors of any company, until he is rehabilitated in accordance 
with this Law.  
  
Article (165 ) 
Bankrupt's Absence from or Relocation of its Domicile  
The insolvent debtor may not be absent from its domicile without notifying the Trustee in 
writing of its place of residence, and may only relocate its domicile based on a written 
permission from the Bankruptcy Court.  
  
  
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 Article (166 ) 
Communications on Bankrupt's Business  
It is required to include in all correspondence in relation to the bankrupt's business during 
bankrupt cy proceedings, in addition stating that the debtor is subject to bankruptcy 
proceedings and its assets are under liquidation.  
  
Article (167 ) 
Placing the Insolvent Debtor under Surveillance 
The Bankruptcy Court may, sua sponte or upon the motion of the Pu blic Prosecution or the 
Trustee, decide to place the insolvent debtor under surveillance, and the Public Prosecution shall implement this decision immediately upon its issuance. The insolvent debtor may 
challenge this decision before the Court of Appeal no t later than (10)  ten days from the date 
of its notification of the decision, and the Bankruptcy Court may decide at any time to end 
the surveillance on the bankrupt.  
  
Article (168 ) 
Overturning the Bankruptcy judgment Before Becoming Final  
1. If the debtor, before the bankruptcy declaration judgment becomes final, becomes able 
to repay all the debts owed thereby, the Court of Appeal may, upon motion of the debtor or the Trustee, grant the debtor a time limit to reach a settlement with its creditors or halt 
the appeal for the period it deems appropriate. If a settlement is agreed upon, it shall be 
submitted to the court for approval and cancellation of the bankruptcy judgment, 
provided that the debtor bears the expenses of the case.  
2. In the event that the debtor  does not reach a settlement agreement with the debtors  
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 within the period granted thereto by the Court of Appeal, the Court of Appeal shall issue 
its decision to dismiss the application referred to in Clause (1 ) of this Article. The period 
for challenging the bankruptcy declaration judgment begins from the day following the 
issuance of the dismissal decision, and the debtor or Trustee may not submit a new 
application in this regard.  
  
Chapter Seven  
Liquidation and Distribution  
Article (169 ) 
Meeting for Prov iding Liquidation and Distribution Proposals 
1. The Trustee shall call the debtor and the creditors to a meeting to provide their proposals 
regarding liquidation and distribution, provided that the meeting is held within (20)  
twenty days from the date the Tru stee takes over the debtor's assets in accordance with 
the provisions of article (131) of this Law. The notice for the meeting shall be served by 
means of notification at least ten days prior to the scheduled date of the meeting (10), 
and the Trustee shall chair the meeting. With the approval of the required majority, any 
of the creditors or third parties may be appointed to chair the meeting, where there are justifications therefor.  
2. The notice to attend the meeting shall be sent to the Unit, where the debt or is supervised 
by the regulatory authority.  
3. The Bankruptcy Court shall, based on a motion submitted thereto by a relevant party 
within (10) ten days from the submission of the motion, issue a decision on any dispute 
that arises regarding the meetings of creditors held in accordance with this Part, whether 
the dispute is regarding who has the right to call for, attend or vote in the meeting or the 
validity of the procedures for holding the meeting and voting therein.   
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 4. The Bankruptcy Court may, upon motion o f any of the creditors, assign the Unit, where 
the debtor is supervised by the regulatory authority, to call for the holding of these 
meetings to the head of the Bankruptcy Department or its delegate to chair them if the 
Trustee does not hold them on the d ates specified for holding such meetings.  
  
Article (170 ) 
Preparation of Liquidation and Distribution Plan  
The Trustee shall develop a plan to liquidate and distribute the debtor's assets to the 
creditors, provided that he completes the preparation of this  plan and notifies the 
representative of the Creditors' Committee and members of the committee, the creditors 
thereof in the event that the Creditors' Committee is not formed, and the Bankruptcy 
Department and the Unit, where the debtor is supervised by th e regulatory authority, within 
(30) thirty days from the date of the creditors' meeting. The Bankruptcy Court may, upon the 
Trustee's request, extend this period for a maximum of three (3 ) months.  
  
Article (171 ) 
Liquidation and Distribution Plan's Particu lars and Attachments 
The liquidation and distribution plan shall include the following attachments:  
1. A statement of all the debtor's assets and their latest valuation.  
2. The method proposed by the Trustee to liquidate the debtor's assets and the justification s therefor.  
3. A statement of whether it is possible to sell all of the debtor's assets at once or a large 
part thereof on the basis of an existing and ongoing activity, or whether the same will be 
impossible and the assets will be sold in parts, as well as t he justification therefor.  
4. Statement of whether the distribution of the debtor's assets to creditors in kind is  
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 possible.  
5. Determine the appropriate timing for sale.  
6. A statement of the assets sold at auction, and those proposed to be sold without an 
auction . 
7. A statement of whether it is possible to make a settlement with the debtor's shareholders in exchange for giving up their shares in the debtor company to the creditors and settling 
the debt in exchange for their shares in the company, in addition to indi cating whether 
the same serves the interests of the creditors and whether the same will be made through establishing a special purpose company to which the debtor's assets will be 
transferred and its shares distributed to creditors, through transferring th e shares of 
shareholders in the debtor company to creditors or through any other method.  
8. A statement of how the proceeds from the liquidation of the debtor's assets will be 
distributed to the creditors, clarifying the order and ranking of the creditors and  the 
amount expected to be collected from each of them.  
9. Determine the expected timetable for completing the liquidation and distribution 
process.  
10. Statement of whether the Trustee will prepare a distribution list regarding the proceeds of the assets that he  sells during certain periods such as (3) three or (6) six months or will 
prepare a distribution list whenever he sells a certain percentage of the debtor's assets, 
or otherwise.  
11. Determine the maximum period between collecting the proceeds from the sale of  the 
asset and distributing the same to creditors.  
12. Any other matters that the Trustee deems necessary to include in the liquidation and 
distribution plan or that are assigned thereto by the Bankruptcy Court.  
The Bankruptcy Court may exempt the Trustee from  including any of the items contained in  
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 this Article if it deems the same inappropriate for the bankrupt's position.  
  
Chapter Eight  
Voting on Liquidation and Distribution Plan  
Article (172 ) 
Liquidation and Distribution Plan Voting Meeting  
1. The Trustee shall call the creditors to approve the liquidation and distribution plan 
pursuant to a notice containing the date and place of the meeting, provided that the 
meeting is held not later than (30)  thirty days from the date of notification of the 
representative of the Creditors' Committee and the members of the committee or 
creditors of the plan and its attachments.  
2. The Trustee shall chair the meeting, and with the approval of the required majority, any of the creditors or third parties may be assigned to chair t he meeting, where there are 
justifications for the same.  
3. The Trustee shall serve the notice within the deadline stipulated in Clause (1 ) of this 
Article to the Unit, where the debtor is supervised by the regulatory authority. In the 
event that the Trustee refrains from holding the meeting as stipulated in Clause (1 ) of 
this Article, the Bankruptcy Court shall, based on a motion submitted thereto by any of the creditors or the Unit, where the debtor is supervised by the regulatory authority, call 
for a meeti ng of creditors. The head of the Bankruptcy Department or his delegate shall 
chair the meeting.  
  
 
 
  
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 Article (173 ) 
Involvement in Voting on Liquidation Plan  
1. Only creditors whose debts are approved, even temporarily, may engage in voting on the 
liquidation and distribution plan. The liquidation and distribution plan shall have met 
the approval of the creditors if approved by the required majority.  
2. If the liquidation and distribution plan is not approved by the required majority at the 
first meeting of credit ors, the meeting shall be postponed for a period of (10) ten days for 
a second meeting to be held to vote on the plan.  
3. If a settlement is not reached with the creditors who disapprove to the liquidation and 
distribution plan, and the plan is not approved b y the required majority at the postponed 
meeting, the same shall be considered a rejection of the liquidation and distribution plan.  
  
Article (174 ) 
Minutes of Liquidation Plan Voting Meeting 
1. A minutes shall be drawn up of the results of the voting meeting  on the liquidation and 
distribution plan, and shall be signed by the Trustee, chairman of the meeting, the 
creditors present and having the right to vote, and the representative of the Creditors' 
Committee. If any of the creditors refuses to sign, their n ames shall be mentioned in the 
minutes, along with the reason for refusal to sign.  
2. If the meeting is attended via modern means of communication, the Trustee shall sign the minutes with a representative of the Unit, where the debtor is supervised by a 
Regul atory Authority.  
  
  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  112 
 Chapter Nine  
Effects of Liquidation and Distribution Plan Approval  
Article (175 ) 
1. The Trustee shall, within ten (10)  days from the date of the creditors' approval or 
rejection of the liquidation and distribution plan, notify the Bankrupt cy Department 
thereof. The plan that was presented to the creditors, minutes of creditor meetings and 
sheet of attendance and voting shall be attached to the notification. If the plan is approved, its approval shall be ratified by the Bankruptcy Court.  
2. In the event that the creditors disapprove the liquidation and distribution plan, the 
Bankruptcy Court shall, not later than ten (10) days from the date of notifying the 
Bankruptcy Department thereof, assign the Unit, where the debtor is supervised by the regulatory authority, to make the necessary amendments to the plan, taking into account 
the creditors' comments and the opinion of the Trustee, in a way that achieves the common interest of the creditors or to submit an alternative plan within the time limit it specifies.  
3. In all cases, the Bankruptcy Court shall issue its decision approving the liquidation and 
distribution plan within (10) ten days from the date of notifying the Bankruptcy 
Department thereof.  
  
Article (176 ) 
Auction Sale of Debtor's Assets  
1. The  Bankruptcy Court may approve the liquidation and distribution plan even if it 
proposes the sale of all or any of the debtor's assets through an open auction or without 
open auction, or that all or part of the debtor's assets be sold as one unit on a "goin g 
concern" basis or on any other basis or selling the same in parts, or any other proposals.   
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 2. The Executive Regulations of this Law shall specify the conditions and procedures for 
selling the debtor's assets through auction, provided that these procedures include the following:  
a. The method of determining the opening price of the auction to sell the debtor's 
securities, real estate or other assets.  
b. Procedures for announcing the auction.  
c. Method of submitting bids and provisions for submitting bids in closed env elopes.  
d. Cases in which the bidder remains liable for its bid.  
e. Procedures for reducing the base price and selling the assets without specifying a 
base price to the highest bidder in the event that a purchaser does not propose to 
buy at the base price.  
  
Article (177 ) 
Bid Submitted by Debtor or Related Party for Purchase of Debtor's Assets  
The debtor or any related party may not submit a bid to purchase any of the debtor's assets offered for sale, except when the same is offered for sale at an open auction.  
  
Article (178 ) 
Periodic Progress Report on Liquidation and Distribution Plan  
The Trustee shall submit to the Bankruptcy Court a monthly statement on the status of liquidation, the amounts collected and the distributions made to creditors in accordance with  the plan.  
  
 
  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  114 
 Article (179 ) 
Order of Debts  
1. The creditors, whose rights are secured by movable or immovable property, shall take 
precedence over other preferred creditors and ordinary creditors, according to the extent 
of their securities, and shall be followed in rank by preferred creditors depending on the 
order of their priorities in accordance with the provisions of this Law.  
2. All reasonable fees and expenses incurred by the Trustee in the course of sale of such 
assets shall be deducted from the proceeds of the sale of the assets securing the debts, 
before distributing such proceeds to secured creditors.  
3. If the Trustee fails to commence sale of secured assets within thirty (30) days following 
the date on which the bankruptcy declaration judgment is render ed against the debtor, 
the secured creditors shall be entitled to petition the Bankruptcy Court permission to 
enforce their rights against their relevant securities, even if the securities have yet to be 
admitted. The petition for permission shall be decid ed on within ten (10 ) days following 
its filing date.  
4. If the Trustee is convinced that the proceeds generated from the sale of any secured assets are not large enough to cover its fees and any relevant costs related to the sale of 
such assets, the Trustee may decide against completing the sale transaction. In which 
case, the Trustee shall immediately notify the secured creditor in writing of any decision made to discontinue the sale of secured assets.  
5. The creditor may object to the Trustee's decision within  five (5) days following the date 
of notification, and the Bankruptcy Court shall decide on the objection within ten (10)  
days, and its decision in respect thereof shall be final.  
6. If there is a surplus generated from the sale proceeds of secured assets, th e same shall be 
delivered to the Trustee in favor of the debtor. If the sale proceeds of secured assets are  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  115 
 less in value than the secured debt's value, after the relevant fees and costs are paid, the 
outstanding balance of the secured debt shall become an  ordinary debt owed by the 
debtor.  
7. The categories of following debts shall be classified as preferred debts to be settled prior 
to the ordinary debts, and shall be repaid as follows:  
a. Any judicial fees or costs, including the fees of Trustees and experts, and any 
expenses spent for the sake of the collective interest of creditors to safeguard and 
liquidate the debtor's assets.  
b. The living expenses (alimony ) debts imposed on the debtor under a judgment 
rendered by a competent court.  
c. The amounts payable to gove rnment authorities.  
d. End -of-service gratuities, unpaid wages and salaries that are due to the employees, 
workers and servants of the debtor and which are periodically paid (except for any 
type of other incidental allowances, bonuses and payments or any othe r benefits, 
whether monetary or in- kind ), provided that the total amount of such items 
combined does not exceed a three -month wage or salary. In addition, the Bankruptcy 
Court may give permission to the Trustee to pay salaries and wages that are due and payable to the debtor's employees, workers and servants for a period of less than 
thirty (30) days from any of the debtor's funds that are in the Trustee's possession.  
e. The professional fees agreed upon between the debtor and any expert appointed by 
the debto r during the bankruptcy proceedings, including the legal consultation fees. 
The Bankruptcy Court may determine such fees sua sponte or based on a grievance 
to be filed by any eligible creditor. The filing of such a grievance shall not stay the 
proceedings,  and the Bankruptcy Court shall decide on the grievance within five (5 ) 
days following its filing date, and its decision thereon shall be final.   
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  116 
 f. Any fees, costs or expenses that fall due following the date of issuance of the 
proceedings initiation decision , for the purpose of procuring goods and services for 
the debtor or to continue to perform any other contract that would be beneficial to 
the debtor's business or assets, or any fees, costs or expenses that arise for the sake of 
ensuring continuation of th e debtor's business following the proceedings initiation 
date according to the provisions of this law.  
8. The creditors belonging to each of the debt categories referred to in Clause (7) of this 
Article shall be treated on an equal footing, unless the debtor' s assets are not valuable 
enough to cover their debts. In which case, their debts shall be reduced on an equal 
footing.  
  
Article (180 ) 
Implementation of Liquidation and Distribution Plan  
1. The Trustee may only pay the creditor's distribution share if the cr editor submits the debt 
deed marked with a proof of being verified and accepted. The debt deed shall be marked 
with a note indicating the amounts paid.  
2. If the creditor fails to submit the debt deed, the Bankruptcy Court may give that its debt 
be paid after  verifying the acceptance of such a debt.  
3. In all cases, the creditor shall mark a quittance on the distribution list.  
  
Article (181 ) 
Liquidation or Distribution Plan Progress Report  
1. If six (6) months have passed without the liquidation process being completed, or 
without any remarkable development be achieved in respect thereof, the Trustee shall submit to the Bankruptcy Court a report on the liquidation status and the reasons for  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  117 
 delayed completion thereof. The Bankruptcy Department shall serve such a rep ort upon 
the creditors and shall call the latter to attend a meeting for discussing the report. This 
action shall be repeated whenever six (6) months have passed without the Trustee 
completing the liquidation work.  
2. In all cases, the liquidation and distrib ution plan shall be completed not later than two 
(2) years starting from the plan implementation commencement date.  
  
Article (182 ) 
Final Account of Bankruptcy Work  
1. The Trustee shall, within ten (10) days following the completion date of the liquidation 
work, notify the Bankruptcy Department and the creditors of the same. The notice so 
served shall be accompanied by a final statement of account on bankruptcy work, 
showing the implementation method of the liquidation and distribution plan, and shall 
call the  creditors and debtors to attend a meeting for discussing the final account and 
giving their comments thereon. The meeting shall be deemed valid regardless of numbers of the creditors or debtors present. A notice of meeting shall also be sent to the unit t o attend the meeting in the event that the debtor is subject to a regulatory 
authority. The meeting shall be held not later than thirty ( 30) days following the date on 
which the creditors are notified that the liquidation work is completed.  
2. The final account shall indicate the shares of debts that have not been finally accepted, as well as the shares of debts in respect of which disputes are still unresolved. All such 
shares shall be set aside and kept in the court's treasury until their respective disputes  
are resolved, and shall then be released to the eligible persons based on the Bankruptcy Court's decision.  
   
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  118 
 Article (183 ) 
Completion of Bankruptcy  
1. The Trustee shall serve upon both the Bankruptcy Department and the creditors a copy 
of the minutes of meeting referred to in article (182) of this Law, within ten (10) days 
following the meeting date.  
2. The Bankruptcy Court shall adjudicate on any grievance filed in respect of the 
completion of bankruptcy work, based upon an application to be submitted to the Co urt 
by an interested creditor, within ten (10) days following the filing date of the grievance.  
  
Article (184 ) 
Handover of Surplus Amounts  
The Trustee shall hand over to the debtor any surplus amounts resulting from the 
liquidation after all debts are set tled, and shall also hand over all documents that are in its 
possession to the eligible party after the proceedings are completed and its task is 
performed.  
  
Article (185 ) 
Creditors to Take Unilateral Actions  
1. Each creditor shall have the right, after the bankruptcy proceeding is completed, to take unilateral actions in order to collect their remaining debt balances. If the creditor's debt 
has been verified and finally accepted under the bankruptcy proceeding, the judgment 
declaring the debtor bankrupt shall serve as a writ of execution whereby each creditor 
may enforce its right against the debtor's assets within the limit of its own debt.  
2. The Case Management Office of the Bankruptcy Court or Appeal Court, as the case may  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  119 
 be, shall issue and deliver to each creditor an executive version of the judgment, 
indicating the name of the creditor and its debt due, based on a certificate to be issued by 
the Bankruptcy Department.  
  
Chapter Ten  
Closure and Termination of Bankruptcy Proceeding  
Article (186 ) 
Closure of Bankruptcy Proceeding due to Lack of Assets  
1. If the bankruptcy proceeding is suspended due to lack of debtor's assets before the composition is endorsed, the Bankruptcy Court may order that the bankruptcy 
proceeding be closed.  
2. The decision to close a bankruptcy proceeding due to lack of debtor's assets shall entitle each creditor to take unilateral actions and initiate individual proceedings as prescribed 
by law.  
3. If a creditor's debt has been verified and finally accepted in the bankruptcy proceeding, 
the sa me may enforce its rights against the debtor's assets pursuant to article (185 ) 
hereof.  
4. The bankruptcy trustee shall be responsible for the documents delivered thereto by the 
creditors for a period of three (3 ) years following the decision on closure of bankruptcy 
proceeding.  
  
Article (187 ) 
Motion to Revoke Bankruptcy Proceeding Closure Decision  
The insolvent debtor and every stakeholder may file a motion with the Bankruptcy Court to  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  120 
 revoke the decision to close the bankruptcy proceeding, if it is proven t hat there are 
sufficient assets to cover the bankruptcy proceeding's costs, or where the trustee receives a 
sufficient amount for that purpose.  
  
Article (188 ) 
Service of Bankruptcy Proceeding Closure Decision  
The Bankruptcy Department shall serve the bank ruptcy proceeding closure decision 
pursuant to article (35 ) hereof, and have the same decision recorded in both the bankruptcy 
register and the commercial register within ten (10 ) days following its date of issuance.  
  
Article (189 ) 
Termination of Bankrupt cy Proceeding due to Extinguishment of Creditors' 
Interest  
The bankruptcy court may decide, after the final list of creditors is announced as described herein, and upon motion of the insolvent debtor or the Trustee, that the bankruptcy 
proceeding be terminated, if either of the following conditions is satisfied:  
1. Where all debts of the creditor that are included in the final list of creditors have been settled; or  
2. Where a sum of money or a bank guarantee is furnished and is sufficient to pay off the creditor 's debts.  
  
Article (190 ) 
Bankruptcy Proceeding Termination Decision by Bankruptcy Court  
1. The bankruptcy court may only issue a decision establishing termination of bankruptcy  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  121 
 proceeding due to extinguishment of the creditors' interest after the Trustee sub mits a 
report asserting the fulfillment of either of the two conditions referred to in article (189)  
hereof.  
2. The bankruptcy proceeding shall be terminated as soon as the decision referred to in 
Clause (1) of this Article is issued, and the Bankruptcy Depar tment shall serve and 
register such a decision within ten (10) days following its date of issue, as described in 
article (35)  hereof.  
3. The bankruptcy trustee shall be responsible for the documents delivered thereto by, or in 
relation to, the debtor for a pe riod of three (3 ) years following the bankruptcy 
proceeding termination date.  
  
Chapter Eleven  
Execution and Effects of Composition  
Article (191 ) 
Composition  
1. Composition may be established in respect of a debt after a final judgment declaring the debtor ba nkruptcy is rendered, in accordance with the provisions of Articles (192 ) 
through (200) hereof, but no composition may be established with an insolvent debtor 
who has been sentenced to bankruptcy fraud.  
2. If investigation is conducted with an insolvent debto r on the grounds of a bankruptcy 
fraud crime, the consideration of composition shall be adjourned.  
3. Conviction sentence rendered against the insolvent debtor on the grounds of bankruptcy 
by default shall not preclude composition with it.  
4. If investigation is  conducted with an insolvent debtor on the grounds of bankruptcy by 
default crime, the creditors may petition the court to either consider the composition  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  122 
 application or postpone consideration of the composition application.  
  
Article (192 ) 
Filing an Application for Composition  
The application for composition shall be submitted to the Bankruptcy Department by the 
debtor or the creditor. Such an application shall include the conditions of compositions and 
shall be accompanied by an updated list of creditors and their respective debts as on the 
application filing date.  
  
Article (193 ) 
Composition Application Filed by Trustee or Debtor  
1. If the composition application is submitted by the trustee, the latter shall attach thereto a comprehensive report on the state  of the bankruptcy proceeding and actions taken in 
respect thereof, and evidence that he presented the terms of composition to the debtor 
and gave him at least (10) ten days to express his opinion regarding the same, indicating 
whether or not the debtor has expressed his opinion on the terms of the composition, as 
well as the trustee's comment on the debtor's opinion.  
2. If the application is submitted by the debtor, the latter shall notify the trustee of the 
terms of the composition before submitting the appl ication. In addition, the debtor shall 
request the trust to provide the former with his opinion on them and provide him with a report on the state of the bankruptcy proceeding and the proceedings that have been taken in connection therewith.  
3. The trustee sh all provide the debtor with the required item (s) within (10) ten days 
following the date of notification, and the debtor shall indicate in the application a proof 
confirming that he has taken such measures, as well as the observations he received  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  123 
 from the trustee and his comments thereon. The report sent by the trustee shall be 
attached with the application in the event that the trustee has responded to the debtor.  
  
Article (194 ) 
Notification of Submission of Composition Application  
The Bankruptcy Departme nt shall, within ten (10) days from the date of submitting the 
composition application, notify the Unit, where the debtor is supervised by the regulatory 
authority, of the application and its attachments. Within the same period, it shall notify the 
creditors and the trustee if the application is submitted by the debtor. Likewise, it shall also 
notify the debtor if the application is submitted by the trustee.  
  
Article (195 ) 
Meeting for Discussing the Terms of Composition  
1. The trustee shall, within ten (10)  days from the date of his notification, call the creditors 
to meet to discuss the terms of the composition. If the application is submitted by the 
debtor and the trustee has not previously expressed his observations on the terms of the 
composition or provid ed the debtor with the report referred to in article (193.1) of this 
Law, he shall attach the report to the notice for the meeting and his observations on the 
terms of the composition.  
2. The provisions of article (172 ) of this Law shall apply to the call for  the meeting and 
voting therein.  
  
 
 
  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  124 
 Article (196 ) 
Action Based on Outcome of Composition Terms Discussion Meeting  
1. The trustee shall notify the Bankruptcy Department of the creditors' approval or 
disapproval of the composition, not later than (10) ten day s following the meeting in 
which the approval or disapproval was decided. He shall attach to the notification the terms of the composition, minutes of meetings and sheet of attendance and voting. If the 
creditors agree to the terms of the composition, it s hall be ratified. The Bankruptcy Court 
shall ratify the same, not later than (10) ten days following notifying the Bankruptcy 
Department of the approval of the composition. The Bankruptcy Department shall, 
within (10) ten days from the issuance of the decision to ratify the composition, notify 
and announce the decision in accordance with article (35)  of this Law, and its summary 
shall be registered in the Bankruptcy Register and the Commercial Register.  
2. The ratification of the composition shall be effective  with respect to the creditors who 
have the right to vote on the terms of the composition. It shall also be effective with 
respect to the creditors who approved and disapproved or objected to the same or the 
ones who failed to appear at the meeting.  
  
Article (197 ) 
Periodic Report on Implementation of Composition Terms  
The trustee shall supervise the implementation of the terms of the composition, submit a monthly report on the proceedings undertaken regarding the implementation of the conditions of the com position and notify the Bankruptcy Department, the creditors, the 
debtor and the Unit, where the debtor is supervised by the regulatory authority.  
  
  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  125 
 Article (198 ) 
Completion of Implementation of Composition Terms  
1. In the event that the conditions for compo sition are fully implemented, the trustee shall 
submit an application to the Bankruptcy Department to issue a decision terminating the 
bankruptcy proceeding through composition and shall notify the authorities specified in 
article (197) of this Law of this  application within (10)  ten days from the expiration date 
of the deadline granted to creditors to submit their objections to the Bankruptcy 
Department. Creditors shall submit their objections to the Bankruptcy Department 
within (10) ten days from the date  of notification of the application.  
2. The Bankruptcy Court shall issue its decision on the application within (10) ten days 
from the date of its submission. In the event that the application is approved, its decision 
regarding the termination of the bankrup tcy proceeding through composition shall be 
issued, in addition, the Bankruptcy Department shall announce and record the decision within (10) ten days following its issuance.  
  
Article (199 ) 
Submitting the Final Account on Bankruptcy Proceeding Ended in 
Composition  
1. The trustee shall submit to the Bankruptcy Department a final account on the 
bankruptcy proceeding within (10) ten days from the date of issuance of the decision to 
terminate the bankruptcy proceeding due to composition, and the Bankruptcy 
Depart ment shall notify the debtor of the final account within (10) ten days from the 
date of its submission.  
2. The debtor may object to the final account within (10) ten days from the date of his 
notification and submit the objection to the Bankruptcy Department.  The trustee shall be  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  126 
 notified thereof within (10) ten days from the date of its submission, and the trustee 
shall respond to the objection, not later than (10) ten days following his notification. The 
Bankruptcy Department shall, within ten (10) days from  the expiry of the deadline 
granted to the trustee to respond, refer the objection file to the Bankruptcy Court to 
decide on the objection, accompanied by a memorandum of its opinion on the 
objection.  
  
Article (200 ) 
Effects of Decision Terminating the Ban kruptcy Proceeding due to 
Composition  
All effects of bankruptcy shall cease to exist upon the issuance of a decision to terminate the 
bankruptcy proceeding due to composition.  
  
Article (201 ) 
Rescission and Invalidation of Composition  
1. Any stakeholder may r equest invalidation of the composition if the insolvent debtor fails 
to abide by its conditions.  
2. The composition shall be invalidated in any of the following cases:  
a. If, after being ratified or after the issuance of a decision to terminate the bankruptcy 
proceeding due to composition, a judgment convicting the insolvent debtor of any of 
the crimes of bankruptcy fraud is issued.  
b. If, after being ratified or after issuance of a decision to terminate the bankruptcy proceeding for composition, fraud emerges resulting from concealing the insolvent 
debtor's assets or exaggerating his debts, in this case an application shall be 
submitted to invalidate the composition, not later than (3 ) three years from the date  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  127 
 of knowledge of the fraud.  
  
Article (202 ) 
Submission o f Application to Invalidate or Rescind Composition by Creditor  
1. An application to invalidate or rescind the composition shall be submitted to the 
Bankruptcy Department by any of the creditors, accompanied by all supporting 
documents, data and information indicating that either of the cases of invalidating the 
composition has been met or that the reason for the rescission has been fulfilled. The 
Bankruptcy Department shall, within (10) ten days from submitting the application, 
notify the creditors of the application and its attachments. It shall further notify the 
debtor and the bankruptcy trustee who was appointed to manage the bankruptcy 
proceeding and the Unit, where the debtor is supervised by the regulatory authority.  
2. The debtor shall respond to or cancel the composition application within (10) ten days 
from the date of his notification. The trustee may make any comments on the 
application during the same period.  
  
Article (203 ) 
Admission of Application for the Invalidation or Rescission of the 
Composition  
1. If the application for invalidation or rescission of the composition and its attachments 
reveal its seriousness, the Bankruptcy Court shall issue a decision admitting the application, not later than (10) ten days from the expiration date of the period stipulated 
in article (202.2) of this Law. The application file shall be referred to the Bankruptcy 
Court, accompanied by a report on the application and the proceedings undertaken in 
this regard.   
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  128 
 2. The trustee shall, in the presence of the Head of the Bankrupt cy Department or his 
representative, within (10 ) ten days from the date of issuance of the decision referred to 
in Clause (1) of this Article, make a supplementary inventory of the insolvent debtor's 
assets and prepare an additional budget.  
  
Article (204 ) 
Service of Decision Granting the Application for Invalidation or Rescission 
of Composition  
1. The decision to admit and refer the application for the invalidation or rescission of the 
composition to the Bankruptcy Court shall be served. Furthermore, it shall be recorded 
and served upon the debtor, creditors, trustee and the Unit, where the debtor is supervised by the regulatory authority, within (10 ) ten days from the date of its issuance.  
2. This decision shall have the same effects as the decision to initiate bankruptcy proceedings in accordance with this Law.  
3. The bankruptcy trustee shall resume managing the debtor's assets starting from the day 
following the date of issuance of the decision to admit the application for the 
invalidation or rescission of the com position. If it is not possible for him to resume his 
mission due to his resignation or for any other reason, the Bankruptcy Court shall appoint another trustee in accordance with the provisions of this Law.  
  
Article (205 ) 
Revoking the Decision Granting t he Application for Invalidation of 
Composition  
The decision referred to in article (204) of this Law shall be deemed annulled by force of  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  129 
 law, with its consequences, in any of the following cases:  
1. Issuance of a judgment by the Bankruptcy Court dismissing t he application for the 
invalidation of the composition, dismissing the application for the rescission of the 
composition or dismissing the application.  
2. If the decision was issued regarding the application for the invalidation of the 
composition and a decis ion was issued by the Public Prosecution to save the 
investigation or a judgment was issued by the Criminal Court acquitting the defendant regarding the same facts for which the application was submitted.  
  
Article (206 ) 
Taking the Precautionary Measures U pon Investigation with the Insolvent 
Debtor 
Subject to the provisions of Articles (202 ) and (203) of this Law, when the investigation is 
conducted with insolvent debtor with regard to the crime of bankruptcy fraud after ratifying 
the composition or after i ssuing a decision terminating the bankruptcy through composition, 
or if a criminal action is filed against him in this crime after this ratification or decision, the 
Bankruptcy Court may, upon the request of the Public Prosecution or any interested party, 
order the taking of whatever precautionary measures it deems necessary to preserve the 
debtor's assets. These measures shall be automatically canceled if it is decided to close the 
investigation or the insolvent debtor is acquitted.  
  
Article (207 ) 
Judgmen t Invalidating the Composition  
1. The Bankruptcy Court shall adjudicate the application submitted regarding the invalidity or rescission of the composition within (10) ten days from the date of the first hearing  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  130 
 thereof.  
2. If the court orders that the composition be deemed invalid or rescinded, the Bankruptcy 
Department shall, within ten (10) days from the date of issuance of the judgment, serve 
and record a summary of such judgment.  
  
Article (208 ) 
Verification of New Debts  
The trustee shall call the new credit ors to submit their debt documents in accordance with 
debt verification procedures. New debts shall be verified in accordance with those 
procedures, without re -verifying previously -approved debts. The trustee shall update their 
data in light of the debts t hat have been paid.  
  
Article (209 ) 
Discharge of Bona Fide Surety  
Invalidating the composition shall results in the discharge of the bona fide surety, who 
guarantees the implementation of the terms of the composition. Rescission of the 
composition shall no t result in the discharge of the surety who guarantees the 
implementation of its terms. Such surety shall be required to appear in the hearings during 
which the application for rescission of composition is to be considered.  
  
Article (210 ) 
Creditors' Recov ery of Full Debts  
1. After the composition is held invalid or rescinded, the creditors shall recover their full 
debts, with respect to the insolvent debtor only, and such creditors shall become part of  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  131 
 the group of creditors with their full original debts if they have collected nothing of the 
share allocated to them under the composition. Otherwise, their debts shall be reduced pro rata the value of debts collected by them.  
2. The provision stipulated in Clause (1) of this Article shall apply in the event that th e 
debtor is declared insolvent before completing the implementation of the composition 
terms.  
 
Part Four  
Common Provisions  
Chapter One  
Effects of Decision to Initiate the Proceedings  
Article (211 ) 
The provisions stipulated in this Part shall apply to the p roceedings in relation to the 
preventive settlement, and bankruptcy declaration, in matters with no special provision in 
this Law.  
  
Article (212 ) 
Recovery of Assets  
1. The owner of the assets in the possession of the debtor may, after obtaining permission from the Bankruptcy Court, recover those assets if he proves that he will sustain serious 
damage as a result of not recovering them, disproportionate to the damage that will 
befall the debtor and other creditors as a result of the loss thereof.  
2. The serious d amage referred to in Clause (1 ) of this Article shall be deemed sustained in 
either of the following cases:   
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  132 
 a. If the value of the assets is expected to decline significantly.  
b. If the assets are not necessary to implement the preventive settlement proposal, th e 
plan or the sale of the insolvent debtor's assets as an "existing and ongoing activity".  
  
Article (213 ) 
Enforcement against the Secured Assets  
Creditors with secured debts may, after obtaining the permission of the Bankruptcy Court, 
initiate the enforce ment proceedings against the assets that serve as security for their debts 
or exercise their rights stipulated in the contract. In which case, the sale may be made 
through the trustee and without the need to initiate enforcement proceedings.  
  
Article (214 ) 
Application Submitted by the Secured Creditors  
1. The trustee, the debtor and the Unit, where the debtor is supervised by the regulatory authority, shall be notified of any application submitted by secured creditors in 
accordance with article ( 213) of this Law, not later than (10) ten days from the date of its 
submission. The Unit, the trustee or the debtor may object to the creditor's application before the Bankruptcy Court, within (10) ten days from the date of their notification, in 
any of the following c ases:  
a. If admitting the application would hinder the debtor from carrying out its activity in a 
meaningful manner.  
b. If admitting the application would prevent the submission of a proposal for a 
preventive settlement or plan that could be approved by the cred itors or would 
render the preventive settlement or useless.  
c. If admitting the application would cause the debtor and creditors damage greater  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  133 
 than the damage that might befall the creditor if the application was dismissed.  
2. The Bankruptcy Court shall issue its decision on the objection referred to in Clause (1 ) of 
this Article, not later than (10) ten days from the date of its submission.  
  
Article (215 ) 
Deciding on the Application for Sale Permission  
1. The Bankruptcy Court shall issue its decision not later th an (10) ten days from the date of 
submitting the application for sale permission.  
2. If the Bankruptcy Court issues its decision permitting the sale, the creditor or trustee shall 
do their best not to sell the assets guaranteeing the debtor's debts or transfe r their 
ownership at less than their market value during the two months preceding the sale or transfer of ownership by (10% ) or more.  
3. If the sale is not completed in accordance with Clause (2 ) of this Article, the creditor or 
trustee shall obtain new permission from the Bankruptcy Court to sell or possess the 
same in accordance with the controls determined by the court.  
 
Article (216 )  
Refusal to Permit the Sale  
The Bankruptcy Court may refuse to grant sale permission, whether the debt is subject to prevent ive settlement proceedings, or bankruptcy declaration, based on an objection 
submitted thereto by the debtor, the trustee or the Unit, where the debtor is supervised by 
the regulatory authority, within the deadlines specified in article (214) of this Law, if the 
person submitting the objection proves that the interest of the creditors requires that all or 
any of the debtor's assets, including the assets serving as securities with the creditors, be 
sold on the basis of an "existing and ongoing activity".   
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  134 
   
Article (217 ) 
Providing Alternative Security for Secured Debts  
The trustee or debtor may offer to the secured creditors an alternative guarantee, provided 
that the alternative guarantee is equivalent to the existing guarantee. If they do not accept 
this off er, the Bankruptcy Court may order that the guarantee be replaced if it becomes clear 
thereto that the alternative guarantee is not less in value than the existing guarantee and 
does not cause damage to the interest of the creditor to whom the alternative guarantee is 
offered, without prejudice to the concessions and effects of the previous registration.  
  
Article (218 ) 
Repayment of Secured debt  
The trustee or the debtor may, as the case may be, after obtaining permission from the 
Bankruptcy Court, pay off the secured debt for the sake of using the pledged assets for the benefit of the remaining creditors.  
  
Article (219 ) 
Co-Principal Debtors 
1. If there is a group of debtors who are liable for a single debt, and a decision is issued to initiate proceedings against any of them on such a debt, the decision shall not have any 
effect on the other co- debtors, unless otherwise stipulated.  
2. If the preventive settlement proposal, plan or composition for the debt for which the decision to initiate the proceedings was iss ued has been ratified, its conditions shall 
apply to the other co -debtors.   
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  135 
   
Article (220 ) 
Collecting the Debt from A Co -Principal Debtor  
1. If a creditor collects part of the debt from any of the co -principal debtors, and then a 
decision is issued to initiat e the proceedings for the rest of the co- debtors or any of them, 
the creditor may only get involved in the proceedings for the remainder of its debt, and 
shall continue to reserve the right to claim repayment of its remaining debt balance from 
any co -debto r against whom no decision to initiate proceedings has been issued.  
2. Such a co -debtor may get involved in the proceedings in accordance with the provisions 
of this Law with regard to the debt balance he has paid on behalf of the debtor in respect 
of whom th e decision to initiate the proceedings has been issued.  
  
Article (221 ) 
Involvement of Creditor in the Proceedings  
1. If a decision is issued to imitate the proceedings for all co -principal debtors at once, the 
creditor may get involved in all proceedings for  each co- debtor with all of its debt until 
he recovers the debt in full, including the principal debt, interest and expenses.  
2. If the total amount collected by a creditor exceeds the value of its debt and its associated 
rights, the excess shall be refunded to the assets of the debtor who is guaranteed by third 
parties according to the order of their obligations in the debt.  
3. If the arrangement referred to in this Article is not fulfilled, the excess amount shall be 
refunded to the debtors' assets, which paid more than their share in respect of the debt.  
  
 
  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  136 
 Article (222 ) 
Estate  
1. If an estate is transferred to the debtor, the latter shall notify the trustee or the creditors, 
as the case may be. Its creditors shall only have a right over such estate after the 
decedent's creditors have recovered their rights from such assets, and the decedent's 
creditors shall not have any rights over the debtor's assets.  
2. If the debtor's assets are managed by the trustee or if precautionary measures have been 
taken over them, the t rustee shall take the necessary measures to protect the interests of 
creditors regarding the debtor's rights in such estate.  
  
Article (223 ) 
Preventing the Debtor from Repaying Debts After Initiation of Proceedings  
1. After the issuance of the decision to initiate the proceedings, the debtor may not repay 
its debts.  
2. The debtor may, subject to prior approval of the Bankruptcy Court, pay off its debts 
arising from the rights of employees and suppliers of machinery, equipment, tools, 
goods, services or other thin gs necessary for the continuation of the debtor's business 
and the preservation and development of its assets, as well as the necessary expenses for 
the debtor and its family so that these amounts are paid on their due dates periodically 
from the debtor's assets.  
  
Article (224 ) 
Set-off 
1. It is not permissible to set off debts payable after the decision to initiate the proceedings,  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  137 
 unless the same is based on the implementation of the preventive settlement proposal or 
the plan or based on a Bankruptcy Court's  decision issued within (10) ten days from the 
date of submitting a motion thereto by the trustee or creditor.  
2. The net set -off agreement shall be considered final and effective in accordance with its 
terms and conditions and may not be suspended or interrupted.  
3. The provisions of Federal Decree Law No. (10)  of 2018 regarding set -off on a net basis 
shall apply to matters not specifically provided for in this Law.  
  
Article (225 ) 
Debt Owed to Creditor After Set -Off 
The remainder of the debt owed to the credito r, after the set- off is carried out, shall be 
included in the debtor's debts and occupy the same rank as the original debt. The remainder 
owed to the debtor shall also be included in the debtor's assets and be paid to the person in 
charge of managing the d ebtor's assets and business.  
  
Article (226 ) 
Conventional Subrogation of Creditor  
The person, who has subrogated the creditor based on an agreement, may not demand a setoff between the rights transferred to them by the creditor and the debts owed by them t o 
the debtor, and shall fulfill the rights of the debtor under his agreement with the debtor and subrogate the creditor who transferred thereto his rights in the proceedings against the debtor.  
  
 
  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  138 
 Article (227 ) 
Distribution of Profits and Disposition of S hares  
1. After the issuance of the decision to initiate the proceedings, the debtor or the trustee 
may not undertake any of the following actions without obtaining the permission from 
the Bankruptcy Court:  
a. Distribution of profits to shareholders and partners.  
b. Board members' and managers' disposition of their shares in the debtor company.  
2. No amendment may be made to the company's articles of association without obtaining 
the approval of the Unit, where the debtor is supervised by the regulatory authority, for 
amendments made during preventive settlement proceedings or the trustee for 
amendments made during or bankruptcy proceedings.  
3. If the debtor is supervised by the regulatory body, the trustee or the Unit may disapprove 
the amendment within ten (10)  days from the date of notification, if the amendment 
would affect the rights of creditors. The debtor has the right to object before the 
Bankruptcy Court to the decision of the Unit or the trustee within (10) ten days from the 
date of its notification.  
4. The Bankruptc y Court shall issue its decision within (10) ten days from the date of 
submitting the objection.  
  
Article (228 ) 
 Recovery  
1. It is permissible that the goods, ownership interests, real estate and any other assets, 
which are kept in the debtor's possession as a bailment or for the purpose of being sold 
on behalf of their owner or for the purpose of being handed over to the owner thereof, be recovered, provided that the same is physically found in the debtor's assets. If such  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  139 
 assets are in a cash form, they shall be deemed to physically exist in the debtor's assets if 
they have been credited to the debtor's personal account with a financial institution.  
2. If the debtor has kept the assets referred to in Clause (1 ) of this Article in the custody of a 
third party, t he same may be recovered from that third party.  
3. If a debtor borrows funds and pledges the assets referred to in Clause (1 ) of this Article to 
secure such a loan but the lender is not aware at the time of pledging that the debtor does not own such assets, they may only be recovered after the secured debt is repaid.  
4. The recovery applications described in this Chapter shall be submitted to the Bankruptcy Department, accompanied by documents proving the eligibility of the recovery applicant 
in respect of its ap plication. The Bankruptcy Department shall notify the debtor, the 
creditors, the trustee and the Unit, where the debtor is supervised by the regulatory 
authority, of the application and its attachments within (10) ten days from the date of its 
submission, and each of them may express its opinion on the application, not later than 
(10) ten days from the date of notification.  
5. The Bankruptcy Court shall decide on the recovery application not later than (10)  ten 
days from the end of the period specified for res ponding to the application.  
  
Article (229 ) 
Recovery of the Price  
The owner may recover the price of the goods, ownership interests or real estate which the debtor sold on behalf of their owner, if the price has not been paid in cash or by a negotiable 
instrument or by set -off in a current account between the debtor and the purchaser, unless 
the said account belongs to the debtor's clients.  
  
  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  140 
 Article (230 ) 
Handover of Debtor's Rights to Trustee  
In the cases referred to in Articles (228) and (229) of this L aw, the recovering party shall 
hand over to the trustee the rights owed to the debtor.  
  
Article (231 ) 
Recovery of the Goods, Ownership Interests or Real Estate from Debtor's 
Assets  
1. If the sale contract is terminated by virtue of a judgment or a condition in the contract 
before a decision is issued to initiate bankruptcy proceedings with respect to the 
purchaser's debt, the seller may recover the goods, ownership interests or real estate 
from the debtor's assets if the same is physically available.  
2. The recovery may be made even if the termination has been made after a decision is 
issued to initiate the proceedings, provided that the action for recovery or termination is 
filed before the aforementioned decision being issued.  
3. The applications for recovery stip ulated in this Article shall be submitted in accordance 
with the same controls and procedures contained in article (228) of this Law.  
  
Article (232 ) 
Withholding Assets or Recovering Possession of Transferred Assets  
1. If a decision is issued to initiate bank ruptcy proceedings for the purchaser before paying 
the price and the goods are still in the seller's possession, the goods have not yet entered 
the purchaser's warehouses or the warehouses of its agent authorized to sell them, or 
where the seller has not t ransferred the ownership interests or real estate to the  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  141 
 purchaser's name, the seller may withhold the aforementioned assets or recover 
possession of the assets transferred for the purpose of handing them over to the purchaser and terminate the sale contract.  
2. The goods may not be recovered if they have lost their nature or if the debtor has 
disposed of them before their arrival without fraud under the title deed or a bill of lading.  
3. In all cases, the trustee or the debtor may, after obtaining the permission  from the 
Bankruptcy Court, request the implementation of the sales contract on the condition that 
he pays the seller the agreed -upon price. If the trustee does not request so, the seller may 
assert his right to termination, claim for compensation and take  part in the bankruptcy 
proceedings.  
  
Article (233 ) 
Cases of Inadmissibility of Rescission and Recovery  
If a decision is issued to initiate bankruptcy proceedings regarding the purchaser's debt before paying the price and after the goods have entered to its warehouses or the 
warehouses of its agent authorized to sell them, in addition to transferring ownership of the ownership interests or real estate to the name of the purchaser, the seller may not request 
rescission of the sale or recovery of the goods, and his right to the lien regarding the goods 
shall be forfeited.  
  
Article (234 ) 
Recovery of Negotiable Instruments and Securities  
1. Negotiable instruments and other instruments of value handed over to the debtor may 
be recovered to collect their value or t o allocate them for a specific payment, if they are 
found in kind in the debtor's assets and their value had not been paid when the decision  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  142 
 to initiate the proceedings was issued.  
2. Recovery is not permissible if the instruments described in Clause (1) of this Article are 
found in a current account between the person requesting recovery and the debtor.  
3. The securities kept with the debtor shall be recovered as a registered owner in 
accordance with the rules of the relevant regulatory authority.  
  
Article (235 ) 
Recovery of Banknotes  
Banknotes deposited with the debtor as a bailment may not be recovered unless the 
recovering party proves their specific characteristics and the specific characteristics of 
banknotes shall be proven by all means of evidence.  
  
Artic le (236 ) 
Recovery of Items  
1. Any person shall have the right to recover from the debtor's assets any items proven to 
be owned by such a person. If the debtor or the trustee, as the case may be, refuses to 
return the items, the dispute shall be referred to th e Bankruptcy Court.  
2. In all cases in which the recovery applications is submitted after the issuance of the 
decision to initiate bankruptcy proceedings, the recovery applicant may only recover the 
claimed items after obtaining permission from the Bankruptcy  Court.  
  
Article (237 ) 
Recovery from the Spouse's Assets  
It is not permissible for either spouse to recover from the other spouse's assets the gifts and  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  143 
 donations given thereto by its spouse during the marriage by the way of disposition 
between the living  or will after death, nor is it permissible for creditors to demand the same.  
  
Article (238 ) 
Spouse's Recovery of its own Assets  
1. Each of the spouses may recover from the other spouse's assets its movable and immovable assets if it proves its ownership the reof, and these assets remain inclusive of 
the rights that the third party has legally acquired over them.  
2. If the recovery application is submitted after the issuance of the decision to initiate 
bankruptcy proceedings, the recovery applicant may not be giv en what it claims without 
obtaining permission from the Bankruptcy Court.  
  
Chapter Two  
Companies  
Article (239 ) 
Corporate Debts  
Unless there is a special provision in this Chapter, the provisions of this Law shall apply to 
preventive settlement, and bankru ptcy proceedings undertaken regarding corporate debts.  
  
Article (240 ) 
Approval of Partners' Majority to Submit Application for Initiation of 
Proceedings  
1. The company manager, the liquidator or third parties may not submit an application for 
initiation of p roceedings in accordance with the provisions of this Law without obtaining  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  144 
 approval to do so from the majority of the partners in the General Partnership, the 
majority of the Active Partners in the Limited Partnership, from the owner partner in the one -person company and from the general assembly, by virtue of a special decision, in 
other companies. The approval of the trustee is sufficient for composition.  
2. The application shall include the names of the Active Partners at the time of submitting 
the applicat ion who exited the company after it ceased to repay its debts, with a 
statement of the domicile of each Active Partner, his nationality and the date of his exit 
from the company in the commercial register.  
  
Article (241 ) 
Suspension of Liquidating or Placi ng the Company under Receivership  
If the debtor is a company and it is decided to initiate proceedings regarding its debts, adjudication of every application whose subject is the liquidation of the company or its 
placement under judicial receivership, shall be suspended. In addition, the identity of the 
company being liquidated shall continue until the completion of the proceedings stipulated 
in this Law.  
  
Article (242 ) 
Trustee's Representation of the Company  
The trustee shall represent and act on behalf o f the company that has been declared 
bankrupt in every matter in which the Law requires taking opinion, the appearance or approval of the Board of Directors, of the bankrupt debtor.  
  
 
  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  145 
 Article (243 ) 
Collecting the Company's Debts from Partners and Shareho lders  
1. With the exception of companies subject to preventive settlement proceedings, if any 
partners or shareholders are indebted to the company due to non- payment of the 
remainder of their shares in the capital or for any other reason, the Bankruptcy Court  
may entrust the trustee to follow up on collecting these debts and to represent the 
company in collecting the same, even if the company is subject to proceedings and 
maintains management of its assets and business.  
2. In the event that a decision is issued t o initiate bankruptcy proceedings, the Bankruptcy 
Court may authorize the trustee to demand from the partners or shareholders the 
unpaid amounts of their shares in the capital, even if the due date has not yet come. The 
Bankruptcy Court may order that this  claim be limited to the amount necessary to repay 
the company's debts.  
  
Article (244 ) 
Application to Initiate Proceedings Applies to Active Partners  
1. The application for initiation of the proceedings submitted regarding the company's debt 
shall be conside red to be submitted at the same time regarding the debt of each of the 
Active Partners therein on the date of submitting the application, in addition to the partners who exited the company and remained obligated to repay its debts.  
2. Each debt shall be indep endent of other debts in terms of proceedings, such as the 
verification of debts, the appointment of trustees, creditor meetings, plans submitted, 
trustees and controllers, as well as the decisions taken in each debt and the judgments 
issued therein. The c ompany's assets consist of its liabilities, including the partners' 
shares, and its liabilities include only the rights of its creditors. As for the general partner,  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  146 
 his assets consist of his own assets, and his liabilities include the rights of his credit ors 
and the company's creditors.  
3. If a decision is issued to initiate for declaring the company's bankruptcy or a judgment is 
issued to declare its bankruptcy, the same shall not prevent the issuance of the decision 
to initiate proceedings for preventive se ttlement or with respect to the partner or vice 
versa. Furthermore, the same provision shall apply to the debts of each Active Partner 
with respect to other partners.  
  
Article (245 ) 
Application for Initiation of Proceedings Applies to any User of the 
Comp any's Name and Acting on its Behalf  
The Bankruptcy Court may consider the application for the initiation of proceedings 
submitted regarding the company's debts as submitted regarding the debt of any person 
who used the name of this company and acted on its  behalf in respect of commercial 
activities on his own account and disposed of the company's assets as if they were his own 
assets. The provisions of article (244.2 and 244.3) of this Law shall apply to the situation 
described herein.  
  
Article (246 ) 
Liabi lity of Directors, Managers and Liquidator for Company's Debts  
1. If the company is declared bankrupt, the Bankruptcy Court may, upon the request of the 
trustee, the Unit, where the debtor is supervised by the regulatory authority, or any of 
the creditors, ob lige the members of the Board of Directors, the managers, any person 
responsible for the actual management of the company or those in charge of the liquidation, in respect of the liquidation procedures executed outside the framework of  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  147 
 this Law, to pay an amount proportional to the mistake attributed to the person 
concerned. The amount shall be used to repay the company's debts if it is proven that any of them committed any of the following acts during the two years preceding the 
company's cessation of paym ent:  
a. Using commercial methods, whose risks are not thoughtfully studied, such as 
disposing of goods at prices lower than their market value in order to obtain 
amounts with the intention of avoiding bankruptcy proceedings or delaying their 
initiation.  
b. Enter ing into transactions with third parties to dispose of assets without 
compensation or in exchange for insufficient compensation and without a confirmed 
or proportionate benefit to the company's assets.  
c. Paying the debts of any creditor with the intention of  causing damage to other 
creditors.  
d. If it becomes clear after the company's bankruptcy that its assets are insufficient to 
pay at least 20% of its debts, as long as it is proven that they failed to manage the 
company in a way that led to the deterioration of its financial condition.  
2. The court shall not issue a judgment declaring the company insolvent debtor if the person to whom the acts described in this Article are attributed proves that he has taken 
all the precautionary measures that a reasonable person could take to reduce the 
potential losses on the company's assets and its creditors.  
3. The case for the liability of the persons specified in Clause (1 ) of this Article shall be filed 
not later than (2 ) two years following the issuance of the judgment declaring the 
company bankrupt, otherwise the right to file the same shall be forfeited.  
4. Any person who has proven its reservations regarding the same in writing shall be 
exempted from liability for the acts stipulated in Clause (1 ) of this Article.   
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  148 
 Chapter Thr ee 
Procedures for Small Debtors  
Article (247 ) 
If, after an inventory of the debtor's assets, it becomes clear that their value does not exceed 
the value specified in the Executive Regulations, the court may, sua sponte or upon the 
motion of the debtor, the  trustee or any of the creditors, order the initiation of proceedings 
for preventive settlement, or bankruptcy declaration, taking into account the following 
provisions:  
1. Shorten the periods stipulated in this Law by half unless the Bankruptcy Court decides  
otherwise.  
2. Never appoint a trustee unless the Bankruptcy Court decides otherwise.  
3. Not appoint a Committee of Creditors unless the Bankruptcy Court decides otherwise.  
4. The preventive settlement proposal or plan shall be considered admissible if it is approv ed by the majority of creditors who have the right to vote in number and value, 
without taking into account the debts and number of creditors who did not engage in 
the vote.  
5. Notwithstanding Clause (4) of this Article, the Bankruptcy Court may decide to initiate 
preventive settlement or proceedings or declare bankruptcy despite the lack of approval 
of the creditors if it deems the same appropriate for the situation of the debtor and the 
interest of the creditors.  
6. All judgments and decisions of the Bankruptcy  Court may not be appealed, unless the 
reason for the appeal is related to lack of jurisdiction or the passage of appeal deadlines.  
  
 
  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  149 
 Article (248 ) 
Discharge of Debtor  
1. Notwithstanding the provisions of article (185)  of this Law, if bankruptcy proceeding 
ends for the debtor referred to in article (247)  of this Law, this debtor has the right to 
submit an application to the Bankruptcy Department to be discharged of its remaining 
debts on the date of submitting the application.  
2. If the debt is any of the debts  referred to in article (182.2)  of this Law, the debtor's 
liability shall be released within the limits in excess of the creditor's share that was set 
aside and reserved for the creditor in accordance with the said Article.  
3. Submitting the application refer red to in Clause (1 ) of this Article shall result in the 
cessation of all measures taken by creditors to collect the remainder of the debtor's debts 
with respect to them.  
4. The Bankruptcy Court shall issue its decision on the application, not later than (10)  ten 
days following its submission, and this judgment shall apply to any personal guarantees 
submitted by the partners in the insolvent debtor company.  
  
Article (249 ) 
Effects of Discharge of Debtor  
1. The debtor's discharge of debts in accordance with article (248) of this Law may not 
result in the debtor recovering assets under liquidation and distribution in accordance 
with the provisions of this Law in a way that makes the creditors, who are parties to the liquidation and distribution procedures, lose the opportunity to fully collect their debts.  
2. The debtor's discharge shall not apply to assets on which the creditor has placed a lien until the date of the day prior to submitting the application to discharge from the 
remainder of the debt in accordance with article (248)  of this Law. In this case, the  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  150 
 debtor's discharge shall apply to what exceeds the debt of the attaching creditor on the 
attached assets.  
  
Article (250 ) 
Cases where Debtor may not be Discharged 
The debtor may not be discharged from the remain der of the debt in accordance with Article 
(248) of this Law in the following cases:  
1. If the debt is owed under the Personal Status Law, or arises from debts owed to the public treasury or is guaranteed by personal insurance.  
2. If the debtor conceals any info rmation or documents required to be provided under this 
Law, he was ordered by the Bankruptcy Court to submit them but he refrains from submitting them or he submits misleading documents or information.  
3. If the debtor engages in any behavior resulting in th e delay with respect to the 
proceedings stipulated in this Law.  
4. If the debtor has previously benefited from the discharge of its debt in accordance with this Law during the six (6) years preceding the date of expiration of the bankruptcy 
proceeding in resp ect of which it applied for a discharge of the debt.  
5. Issuance of a final judgment against the debtor imposing a deprivation of liberty penalty 
for any crime affecting the national economy or any of the crimes stipulated in this Law, 
unless it has been rehabilitated.  
6. If the criminal case relating to any of the crimes mentioned in Clause (5 ) of this Article is 
still under investigation or trial, the procedures for requesting a discharge of the debt and 
all measures taken against the debtor to collect the remainder of the debt shall be 
suspended until a final judgment is issued thereon. In this case, the Bankruptcy Court 
may issue whatever precautionary measures it deems appropriate to preserve the rights  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  151 
 of creditors.  
  
Part Five  
Proceedings for Preventive Set tlement, or Bankruptcy Declaration During 
Emergency Financial Crisis  
Article (251 ) 
Provisions Applicable to Preventive Settlement, or Bankruptcy Proceedings 
During Emergency Financial Crisis  
As an exception to the provisions of this Law, the provisions of this Chapter and the 
decisions issued in implementation of its provisions shall apply to proceedings for 
preventive settlement, or bankruptcy declaration during an emergency financial crisis, 
provided that the provisions of this Law shall apply to the matt ers not specifically provided 
for in this Chapter, and in a manner that does not conflict with its provisions.  
  
Article (252 ) 
Granting the Application for Initiation of Proceedings During Emergency 
Financial Crisis  
If the debtor submits an application for  initiation of the proceedings for the preventive 
settlement, or bankruptcy declaration during an emergency financial crisis, the Bankruptcy Court may admit the application and take whatever measures it deems appropriate, 
including proceeding with the proc eedings without the need to appoint a trustee, provided 
that the debtor proves that the instability in respect of financial position or financial condition of the debtor arose due to the emergency financial crisis.  
   
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  152 
  
Article (253 ) 
Giving the Debtor a Time Limit to Negotiate with Creditors  
1. If the Bankruptcy Court admits the debtor's application stated in article (252) of this 
Law, the debtor may ask the court to grant him a period not exceeding forty (40) days to 
negotiate with the creditors to reach an agr eement to settle its debts.  
2. The debtor shall announce a summary of the Bankruptcy Court's decision to approve 
granting the debtor the period, provided that the notification includes a notice to the 
creditors to negotiate with the debtor to agree on the set tlement, not later than twenty 
(20) days from the date of the notification. The notice shall specify the place or means 
through which the negotiation procedures will be executed.  
3. The debt settlement period offered by the debtor shall not exceed (12) twelve months 
from the date of the Bankruptcy Court's decision approving the debtor's application.  
4. The summary of the negotiations between the debtor and creditors and the settlement 
agreement shall be documented in writing, including the exchange of corresponde nce 
via electronic means. In the event that an agreement is reached to settle the debtor's 
debts by creditors representing two -thirds of the value of the debt, who got involved in 
the negotiation procedures with the debtor, this agreement shall be binding on all creditors, including creditors who abstained from engaging in the negotiation 
procedures.  
5. The debtor and any creditor who has an interest in the proceedings shall notify the Bankruptcy Court and all creditors of the details of the settlement agreeme nt contained 
in this Article within (10)  ten days from the date of the written approval of the creditors. 
The Bankruptcy Court may issue a decision rejecting the settlement agreement within 
(15) fifteen days from the date of its notification of it if it be comes clear that it is not  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  153 
 consistent with good faith in implementing obligations.  
6. Any creditor who does not agree to the settlement agreement in accordance with the 
provisions of this Article may file an objection before the Bankruptcy Court within (15) 
fifteen days from the date of its notification of the settlement agreement, and the court 
shall decide on the objection not later than five ( 5) days from the date of submitting the 
objection, after its decision is final and binding on all creditors.  
  
Article (254 ) 
Postponing Consideration of Creditors' Application for Initiation of 
Proceedings  
1. The Bankruptcy Court shall not take any precautionary measures on any of the debtor's 
assets necessary for the continuation of its business during the period of the e mergency 
financial crisis, including affixing seals on the debtor's business headquarters and assets, except for what the court deems unrelated to the conduct of the debtor's business.  
2. The Bankruptcy Court shall not take any precautionary measures on any o f the debtor's 
assets necessary for the continuation of its business during the period of the emergency financial crisis, including affixing seals on the debtor's business headquarters and assets, 
except for what the court deemed unrelated to the conduct o f the debtor's business.  
  
Article (255 ) 
Amending the Deadlines and Time Limit Set out in the Law  
If the application for the initiation of proceedings was submitted by the debtor or creditor and was admitted by the Bankruptcy Court before the emergency financial crisis, the 
Bankruptcy Court may amend the deadlines and periods set out in this Law to additional 
periods not exceeding twice what is stipulated in cases other than emergency financial  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  154 
 crises, to address the direct consequences resulting from the c ircumstances of the 
emergency financial crisis on the debtor's business.  
  
Article (256 ) 
Actions of Directors and Managers During Emergency Financial Crisis  
1. If the debtor is a legal person and ceases to repay the debts owed thereby due to the 
emergency fin ancial crisis, the members of the Board of Directors and managers shall 
not assume liability if they dispose of the debtor's assets in order to pay the unpaid wages and salaries paid periodically, excluding any kind of allowances, bonuses and 
other incidental payments, whether material or in kind, owed to the debtor's employees, 
workers and users necessary for the continuation of the business during the emergency 
financial crisis.  
2. The members or managers of the Board of Directors of the legal person shall, as the case may be, update the company's accounts and data in light of the losses arising from the 
emergency financial crisis, act with caution and good faith and work in the best way 
possible to serve the interests of the legal person in respect of protec ting its objectives 
and financial assets.  
  
Article (257 ) 
Permission for Debtor to Obtain New Finance  
If the debtor's application for the initiation of preventive settlement and proceedings is admitted in accordance with article (252) of this Law, the Bank ruptcy Court may permit the 
debtor, based on its request, to obtain new financing with or without guarantee, in 
accordance with the following provisions:  
1. The new financing shall have priority over any existing ordinary debt owed by the debtor  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  155 
 on the date o f the decision to initiate the proceedings.  
2. The possibility of guaranteeing the new financing by mortgaging any of the debtor's 
unmortgaged assets.  
3. The possibility of guaranteeing the new financing by executing a mortgage on the 
debtor's mortgaged assets that were valued at a value exceeding the value of the debt 
secured by the previous mortgage. In this case, the new mortgage shall have a lower rank 
than the existing mortgage on the same assets, unless the creditors whose debts are 
secured by the assets su bject to the mortgage agree that the new mortgage shall have a 
rank equal to or higher than the existing mortgage on the same assets.  
4. If the mortgagee creditor is a licensed financing body, it is permissible to mortgage the 
same asset even if it was valued  at a value equal to the value of the debt secured by the 
previous mortgage, at a value not exceeding (30% ) of the value of such asset, and the 
Bankruptcy Court may issue an approval decision. The new mortgage shall have a rank equal to or higher than the existing mortgage on the same asset, especially if the 
objective of the new financing is to obtain materials or services necessary for the 
continuation of the debtor's business to achieve returns for the debtor for the purpose of 
helping it settle its outs tanding debts.  
  
 
 
 
 
 
 
  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  156 
 Part Six 
Grievances and Appeals 
Chapter One  
Grievances  
Article (258 ) 
Grievances against Debtor's or Trustee's Acts  
Any interested party may file a grievance before the Bankruptcy Court when the debtor or 
trustee commits any of the following acts:  
1. If it failed to such party of attending any of the creditors' meetings or to inform it of the meeting in accordance with the provisions of this Law.  
2. If he proposes to act or acts in an unfair manner to cause damage to the said party's intere sts 
3. If it neglects or fails to perform its duties or does not exercise due diligence in accordance 
with established principles.  
4. If it misuses or withholds any assets or property belonging to the debtor or breaches any liability owed thereby to the debtor.  
  
Article (259 ) 
Grievance against Bankruptcy Department's Acts  
Any interested party may file a grievance before the Bankruptcy Court if the Bankruptcy Department fails to perform any of its obligations stipulated in this Law.  
  
 
  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  157 
 Article (260 ) 
Filing of Gr ievance  
The grievance shall be submitted in accordance with this Part, not later than (10) ten days 
from the date of the Grievant's knowledge of the aggrieved incident. If this incident is 
subject to notification or announcement in accordance with this Law , the time period for 
grievance begins from the date of notification of the grievance or announcement, whichever 
is earlier.  
  
Article (261 ) 
Notification of and Responding to Grievance  
1. The grievance shall be submitted to the Bankruptcy Department which shall notify the 
trustee, the Unit, where the debtor is supervised by the regulatory authority, the 
controller and the debtor if the grievance was submitted by another person, not later 
than (10) ten days from the date of its submission. Any other person whos e rights may 
be affected by the decision issued in the grievance shall also be notified of the grievance, 
in accordance with the matters to be determined by the Bankruptcy Court in this regard.  
2. Any interested party may submit a memorandum to the Bankruptcy  Department, 
responding to the grievance, not later than (10)  ten days from the date of its notification 
of the grievance.  
3. The Bankruptcy Court shall decide on the grievance with a reasoned decision, not later 
than (10) ten days from the expiration date of  the period stipulated in Clause (2 ) of this 
Article.  
 
 
   
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  158 
 Article (262 ) 
Effects of Filing of Grievance 
1. The grievance shall not entail the suspension of the proceedings unless the Bankruptcy 
Court decides otherwise.  
2. The Bankruptcy Court may request the Grie vant to provide an in -kind or bank guarantee 
issued by any of the banks operating in the State, or any other guarantee it decides, to 
guarantee any damage that may occur as a result of suspension of the proceedings.  
3. The Grievant shall recover the guarantee  if the grievance is decided in its favor.  
  
Chapter Two  
Appeal  
Article (263 ) 
Appealing before the Court of Appeal  
1. Any interested party may file an appeal against the Bankruptcy Court's decision before 
the Court of Appeal, not later than thirty (30) days f rom the date of service or notification 
of the decision.  
2. Judgments issued by the Bankruptcy Court may be appealed before the Court of Appeal, 
not later than thirty (30) days from the date of issuance of the judgment.  
  
Article (264 ) 
Appeal Filing Procedures  
1. The challenge shall be submitted to the Bankruptcy Department, which shall register the same with the Court of Appeal. The Court shall set a hearing to consider such challenge 
within (30) thirty days from the date of its submission. The date on which the  challenge  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  159 
 is submitted shall be considered the time of its submission to the Bankruptcy 
Department.  
2. The Bankruptcy Department shall notify the parties of the challenge and notify the Unit, 
where the debtor is supervised by the regulatory authority, as well as the trustee and the 
controller if they are not litigated, and everyone whom the Bankruptcy Court deems 
necessary to notify, within a maximum period of (10)  ten days from the date of 
submitting the challenge.  
3. The Unit, the trustee and the controller sh all each submit to the Bankruptcy Department 
a memorandum of its opinion on the challenge, not later than (10)  ten days following 
their notification, and each interested party may submit to the Bankruptcy Department a 
memorandum of its defense or opinion w ithin the period described herein.  
  
Article (265 ) 
Judgment on the Appeal 
1. The Bankruptcy Department shall refer the challenge file and the memorandums it has received to the Court of Appeal within (10) ten days from the end of the period referred 
to in Art icle (264.2) of this Law, provided that a memorandum of its opinion thereon is 
attached thereto. The challenge shall not result in suspension of the proceedings, judgment or challenged decision, unless the Court of Appeal decides otherwise.  
2. The judgment of  the Court of Appeal on the appeal shall become final and may not be 
challenged by any means of challenge. However, this judgment may be retracted before 
the court that issued it in accordance with the rules contained in the Civil Procedure Law.  
3. Judgments issued by the Court of Appeal shall be enforced without service, and no 
objection may be filed against them.  
   
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  160 
 Part Seven  
Crimes, Penalties and Rehabilitation  
Article (266 ) 
Application of the Most Severe Penalty  
The penalties stipulated in this Part shall not prejudice to any more severe penalty stipulated 
in any other law.  
  
Article (267 ) 
Considering the Trustee and Controller as Public Employees  
The trustee and controller shall be considered a public employee with regard to actions for 
which the laws have  established a penalty or whose punishment has been harshened if 
committed by a public employee.  
  
Article (268 ) 
Concealment of Books and Detrimental Acts Committed by the Debtor  
Any debtor, whose bankruptcy has been declared based on a final judgment, and  who, after 
having ceased to repay its debts, commits any of the following acts, shall be considered to 
have committed bankruptcy fraud and shall be punished with imprisonment sentence for a 
period not exceeding (5 ) five years and / or a fine not exceeding  (AED 1,000,000) million 
UAE dirhams:  
1. Conceals all or any of its books, destroys and alters the same with the intention of 
causing damage to its creditors.  
2. Disposes of its assets after it ceases to repay its debts or after it becomes in a state of 
deficit in the financial position, if the same is made with the intention of excluding these  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  161 
 assets from the creditors.  
3. Conceals part of its assets with the intention of causing damage to its creditors.  
4. Acknowledges debts that are not owed thereby or reduces its a ssets while being aware 
of the same, whether the acknowledgment is made in writing, orally, in the balance 
sheet, or through refraining from submitting papers or clarifications.  
5. Obtains ratification on the terms of composition by fraud.  
  
Article (269 ) 
Con cealment of Books and Embezzlement by Debtor's Managers  
The chairman and members of the company's board of directors and its managers, auditors 
and officers responsible for its liquidation or, shall be punished with imprisonment for a 
period not exceeding (5 ) five years and / or a fine not exceeding (AED 1,000,000) million 
UAE dirhams, if, after a final decision is issued to initiate proceedings against the company, 
they commit any of the following actions:  
1. Conceal, destroy or alter all or any of the compan y's books.  
2. Embezzle or conceal of part of the company's assets.  
3. Acknowledge debts that are not owed by the company, while being aware of the same, 
whether the acknowledgment is made in writing, orally, in the budget, or through 
refraining from submitting p apers or clarifications in their possession while being aware 
of the consequences thereof.  
4. Obtain approval of the preventive settlement proposal, plan or settlement terms through 
fraudulent means.  
5. Declare matters that are contrary to the truth about the su bscribed or paid -up capital, 
distribute fictitious profits, embezzle any of the company's assets in the form of bonuses, 
if it is proven that they are aware at the time of embezzling those assets that they were  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  162 
 not entitled to all or any thereof.  
  
Article (270 ) 
Bankruptcy by Default  
Any debtor, who has been declared insolvent debtor by a final judgment and is proven to 
have committed any of the following actions, shall be considered insolvent debtor by default 
and shall be punished with imprisonment sentence and / or a fine not exceeding one 
hundred thousand UAE dirhams (AED 100,000):  
1. Spends exorbitant amounts for its personal expenses or household expenses, if any of 
the same is among the reasons for its cessation of payment.  
2. Fails to keep sufficient comme rcial books to determine the true financial position or to 
carry out the inventory required in accordance with the law.  
3. Refrains from submitting the data requested by the trustee, the Bankruptcy Court or the 
Court of Appeal.  
4. Pays any debt in a manner contr ary to the terms of the preventive settlement proposal or 
the approved plan or Dispose of any assets in a manner contrary to the terms stated in the proposal or plan.  
5. Pays, subsequent to the cessation of the payment, a debt to any of the creditors to the 
detriment of the rest or provide a guarantee or special benefits to any of the creditors in 
preference to the rest, even if the same is made with the intention of obtaining the 
approval of the required majority on a preventive settlement proposal, plan or 
composition.  
6. Disposes of its goods or any of its assets or rights at a significantly lower price or market 
value with the intention of delaying its cessation of payment or declaration of its 
bankruptcy, delaying the rescission of the composition, preventive  settlement proposal  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  163 
 or plan or, for this purpose, resorting to illegal means to obtain sums of money.  
7. Spends huge sums of money on fictitious speculation in matters other than the activities 
required for its business.  
  
Article (271 ) 
Fraudulent Behavior b y Directors, Managers and Liquidators 
In the event that a final judgment is issued declaring the bankruptcy of a company, the 
members of its Board of Directors, managers and liquidators shall be punished with 
imprisonment and / or a fine not exceeding five  hundred thousand  UAE  dirhams (AED 
500,000), if they commit any of the following actions:  
1. Determine exorbitant remuneration for members of the Board of Directors, the CEO and managers during the three (3 ) years preceding the company's cessation of payment,  and 
the same was one of the reasons for the cessation.  
2. Failure to maintain commercial books sufficient to determine the true financial position 
of the company or failure to carry out the inventory required in accordance with the law.  
3. Refrain from submitting the data requested by the trustee, the Bankruptcy Court or the 
Court of Appeal or deliberately provide incorrect data.  
4. Dispose of its goods or any of its assets after the cessation of payment, if the same is intended for concealing these assets from cre ditors.  
5. Pay any debt in a manner contrary to the terms of the preventive settlement proposal or 
the approved plan or Dispose of any assets in a manner contrary to the terms stated in 
the proposal or plan.  
6. Pay, subsequent to the cessation of the payment, a debt to any of the creditors to the 
detriment of the rest or provide a guarantee or special benefits to any of the creditors in 
preference to the rest, even if the same is made with the intention of obtaining the  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  164 
 approval of the required majority on a prev entive settlement proposal, plan or 
composition terms.  
7. Dispose of the company's goods or any of its assets or rights at a significantly lower price 
or market value, in a manner not tolerated based on the customary practices, with the 
intention of delaying the company's cessation of payment or declaration of its 
bankruptcy, delaying the rescission of the preventive settlement proposal, plan or the 
composition terms, or, for this purpose, resorting to illegal means to obtain sums of 
money.  
8. Spend huge sums of money on fictitious speculation in matters other than the activities required for the company's business.  
  
Article (272 ) 
Effect of Criminal Action for Bankruptcy by Fraud or Default  
If the criminal actions are filed for bankruptcy fraud or bankruptcy by d efault, or where a 
judgment is issued in accordance with the provisions of the foregoing Articles, the 
proceedings for preventive settlement,, bankruptcy declaration and composition shall remain independent of the criminal actions without being referred to  the criminal court, 
unless this Law provides otherwise.  
  
Article (273 ) 
Embezzlement by the Trustee  
1. A penalty of imprisonment and / or a fine of not more than (AED 1,000,000) a million 
UAE dirhams shall be imposed on any trustee who embezzles the debtor's  assets during 
his management.  
2. The court shall order that the assets be returned to the debtor, and may, upon motion of  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  165 
 the interested parties, award compensation, if necessary.  
  
Article (274 ) 
Embezzlement by Third Parties  
1. Whoever steals, embezzles or con ceals the debtor's assets while being aware that a 
decision has been issued to initiate bankruptcy declaration proceedings, even if the 
debtor's spouse, any of their ascendants or descendants or the ascendants or 
descendants of their spouse, shall be punis hed with imprisonment for a period not 
exceeding (5) five years.  
2. The court shall order that the assets be returned to the debtor, and may, upon motion of the interested parties, order compensation when necessary.  
  
Article (275 ) 
Fraudulent Behavior of Cred itors  
1. A penalty of imprisonment and / or a fine of not more than (AED 300,000) three 
hundred thousand UAE dirhams shall be imposed on any creditor of a debtor in respect 
of whom a decision to initiate proceedings has been issued and commits any of the following acts:  
a. increase their debts owed by the debtor by fraud.  
b. Grant in their own favor, in agreement with the debtor or with third parties, special 
benefits in exchange for voting in favor of the debtor during the creditor meetings.  
c. Enter into a secret agr eement with the debtor after the cessation of payment, 
whereby they grant themselves special benefits to the detriment of the rest of the creditors, while being aware of the same.  
2. The court shall order that the agreements referred to in Clause (1.C ) of thi s Article are  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  166 
 invalid, with respect to the debtor and any other person, and that the creditor shall be 
obligated to refund the assets seized under the invalid agreement, even if an acquittal was issued. The court may, upon the request of the interested par ties, award 
compensation when necessary.  
  
Article (276 ) 
Submission of Fictitious Debts  
Whoever fraudulently submits fictitious debts in their name or in the name of third parties shall be punished with imprisonment and / or a fine not exceeding (AED 500,000 ) five 
hundred thousand  UAE  dirhams.  
  
Article (277 ) 
Debtor's Fraudulent Acts  
Any debtor who commits any of the following acts shall be punished with imprisonment and / or a fine not exceeding (AED 500,000) five hundred thousand UAE dirhams:  
1. Intentionally conceals all or any of their assets, with the intention of obtaining the approval of the required majority on the preventive settlement proposal, plan or 
composition terms.  
2. Intentionally enables a fictitious creditor or a creditor prohibited from engaging in the proceedings or a debtor who has overstated its debt to take part in the deliberations and 
voting or intentionally lets their take part therein.  
3. Intentionally omits to mention any of the creditors in the List of Creditors.  
  
 
  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  167 
 Article ( 278 ) 
Unlawf ul Participation of Creditor in the Proceedings  
Any creditor, who commits any of the following acts shall be punished with imprisonment 
for a period not exceeding (2 ) two years and / or a fine not exceeding (AED 200,000) two 
hundred thousand UAE dirhams:  
1. Deliberately overstated their debts.  
2. Took part in deliberations or voting while knowing that they are legally prohibited from 
doing so.  
3. Enter into a secret agreement with the debtor, whereby they are granted special benefits 
to the detriment of the rest of the creditors, while being aware of the same.  
  
Article (279 ) 
Non -Creditor's Unlawful Participation in the Proceedings  
The penalty of imprisonment for a period not exceeding one year and / or a fine of not more than (AED 200,000) two hundred thousand UAE dirhams shall be imposed on whoever:  
1. Is not a creditor and gets involved in the deliberations or voting knowing that he is not a creditor.  
2. Any controller or trustee who intentionally gives incorrect data about the debtor's 
condition, confirms this data or d iscloses data of a confidential nature delivered thereto 
on the occasion of his appointment as controller or trustee in accordance with this Law.  
  
Article (280 ) 
Willful Refusal to Execute the Decisions Issued by Bankruptcy Court  
Whoever abstains from exec uting a decision issued by the Bankruptcy Court in accordance  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  168 
 with this Law in respect of submitting data, information or documents or giving testimony, 
shall be punished with imprisonment for a period not exceeding one year and / or a fine of not more tha n (AED 200,000) two hundred thousand UAE dirhams.  
  
Article (281 ) 
Stay of the Criminal Proceedings  
If the Bankruptcy Court decides to initiate preventive settlement or proceedings in 
accordance with this Law, any criminal proceedings that have been initiat ed or will be 
initiated against the debtor shall be stayed, if the same arises from actions related to 
issuance of bounced cheques with respect to the cheques issued by the debtor, before 
initiating the proceedings. The creditor holding the bounced cheque shall be included in the 
creditors, and their debt shall become part of the debtor's total debts.  
  
Article (282 ) 
Effects of Stay of the Criminal Action  
1. The effect of suspension of the criminal proceedings referred to in article (281) of this 
Law shall con tinue until the Bankruptcy Court issues a decision to ratify or reject the 
preventive settlement proposal and plan in accordance with the provisions of this Law.  
2. If the Bankruptcy Court approves the preventive settlement proposal or plan, the same 
shall re sult it the extension of the stay of the criminal proceedings that have been 
initiated, until the implementation of the proposal or plan is completed.  
3. If the debtor obtains a decision indicating that the implementation of the preventive settlement proposal  or the plan has been completed, the Public Prosecution shall issue a 
decision to close the investigation, and the criminal court shall issue a judgment terminating the criminal action. If a final judgment has been issued on the criminal  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  169 
 action, its execut ion shall be stayed.  
4. The stay of criminal proceedings shall end as soon as a decision or judgment is issued 
terminating or invalidating the preventive settlement or proceedings.  
  
Article (283 ) 
Service of Criminal Judgments  
The Bankruptcy Department shall,  within (10) ten days from the date of issuance of the 
criminal judgment for any of the crimes stipulated in this Law, serve its judgment and record the same in the Bankruptcy Register and the Commercial Register.  
  
Article (284 ) 
Prohibition from Managemen t or Practice of Business  
When a court renders conviction judgment on the crimes stipulated in Articles (278, 279, 
and 280) of this Law, the court may order that the convict be prohibited from managing any 
company or practicing any business, for a period not exceeding (3 ) three years from the date 
of the end of the bankruptcy proceeding. The name of the convict and the penalty imposed 
thereon shall be registered in the commercial or professional register, as the case may be, 
and if recorded, the penalty imp osed thereon shall be annotated.  
  
Chapter Two  
Rehabilitation of Insolvent Debtor  
Article (285 ) 
Unless otherwise stipulated in this Chapter, the debtor declared bankrupt shall recover the 
rights which have been denied to them under the provisions of this law, upon the lapse of  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  170 
 one year from the bankruptcy proceeding end date.  
  
Article (286 ) 
Rehabilitation for Payment of All Debts  
1. A judgment shall be issued to establish rehabilitation of the insolvent debtor, even if the 
period stipulated in article (285) of this Law has not expired, if the insolvent debtor pays 
all of his debts, including the principal debt and expenses, including the part for which he was discharged.  
2. If the insolvent debtor is an active partner in a company that has been declared 
bankrupt,  their rehabilitation shall only be established after they pay off all of the 
company's debts, including principal debts and expenses.  
  
Article (287 ) 
Rehabilitation of Convicted Debtor  
1. Rehabilitate may only be granted to an insolvent debtor who has been c onvicted of any 
of the crimes in relation to the bankruptcy fraud or bankruptcy by default after the lapse 
of (3) three years from the execution of the penalty or its pardon, its extinguishment due 
to the statute of limitations or the expiration of its per iod if a judgment is issued to stay 
its execution, provided that they have settled all their debts, including the principal 
debts, interest and expenses or have agreed to establish composition in respect of them 
with the creditors and implemented the terms  of the composition.  
2. If the insolvent debtor has not paid off their debts, they may only be rehabilitated after 
(10) ten years have passed since the execution of the penalty or its pardon, 
extinguishment due to the statute of limitations or the expiry of its period if a judgment is issued to stay its execution.   
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  171 
   
Article (288 ) 
Rehabilitation of Insolvent Debtor after Death  
The insolvent debtor shall be rehabilitated after their death upon motion of any of the heirs, 
and the dates stipulated in article (285) of this Law shall be calculated as of the date of 
death.  
  
Article (289 ) 
Creditor's Refusal to Collect Debt  
If a creditor willfully refuses to collect their debt or is absent, or where it is not possible to 
identify their place of residence, the debt may be deposited in the treasury of the Bankruptcy 
Court, and a deposit slip in connection with rehabilitation shall be considered as quittance.  
  
Article (290 ) 
Submission of Application for Rehabilitation  
1. The application for establishing rehabilitation, accom panied by supporting documents, 
shall be submitted to the Bankruptcy Department. The Bankruptcy Department shall 
send the application within (10) ten days from the date of its submission to the Public 
Prosecution, and it shall be recorded in the Commercial Register.  
2. The Bankruptcy Department shall, within ten (10 ) days from the date of submitting the 
application, notify the creditors whose debts were approved in the bankruptcy 
proceeding of the application for establishing rehabilitation.  
3. The summary of the  application shall be announced at the insolvent debtor's expense, 
and the summary shall include the name of the insolvent debtor, the date of issuance of  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  172 
 judgment declaring bankruptcy, the method of ending the bankruptcy proceeding and a 
notice to the cre ditors to submit their objection, if necessary.  
  
Article (291 ) 
Public Prosecution's Report on Rehabilitation Application  
The Public Prosecution shall, within (10) ten days from the date of its receipt of a copy of the 
rehabilitation application, submit to  the Bankruptcy Department a report containing data 
including the type of bankruptcy, the judgments issued against the insolvent debtor in bankruptcy crimes, the trials or ongoing investigations therewith in this regard and its 
opinion on the application.  
  
Article (292 )  
Objection to Rehabilitation Application by Creditors  
Any creditor, who has not collected their right, may submit an objection to the rehabilitation 
application within (10) ten days from the date of service of the application's summary. The  
objection shall be filed under a written report to be submitted to the Bankruptcy Department, accompanied by the supporting documents.  
  
Article (293 ) 
Rehabilitation Application Hearing  
1. The Bankruptcy Department shall, within ten (10) days of receiving th e Public 
Prosecution's response, transfer the file of the rehabilitation application and the 
objections to the Bankruptcy Court, accompanied by a report of its opinion on the 
application.   
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  173 
 2. The Bankruptcy Court shall schedule an urgent hearing to hear the re habilitation 
application, and shall notify the creditors who have submitted objections.  
  
Article (294 ) 
Deciding on Rehabilitation Application  
The Bankruptcy Court shall decide on the rehabilitation application under a final judgment. 
If the Bankruptcy Court dismisses the application, the same may only be filed again after one 
year following the date of issuance of the judgment.  
  
Article (295 ) 
Suspension of Decision on the Rehabilitation Application  
1. If, before the rehabilitation application is decided on, investigations are conducted with the insolvent debtor regarding any of the bankruptcy crimes or where a criminal action 
has been initiated against them in this regard, the Public Prosecution shall immediately notify the Bankruptcy Court.  
2. The Bankruptcy Co urt shall suspend adjudication on the rehabilitation application until 
the investigations are completed or a final judgment is rendered on the criminal action.  
  
Article (296 ) 
Judgment Against the Debtor on any Bankruptcy Crime After Judgment 
Establishing Rehabilitation  
If a judgment of conviction is rendered against the insolvent debtor on the grounds of any of 
the bankruptcy crimes after a judgment establishing their rehabilitation had been rendered, 
the latter judgment shall be considered null and void, and the insolvent debtor may only  
Federal Decree- Law of 2023 Promulgating the Financial and Bankruptcy Law  174 
 seek rehabilitation afterwards in accordance with the conditions stipulated in Articles ( 285, 
286 and 287) of this Law.  
  
Article (297 ) 
Effect of Judgment Establishing Rehabilitation of Insolvent Debtor  
The judgment establishing rehabilitation shall entitle to the insolvent debtor to recover their 
political rights and shall remove all restrictions on their civil capacity to acquire rights, 
assume obligations and occupy public jobs. In addition, the insolvent debtor shall re store 
their legal capacity that existed before they ceased to pay off their debts.