2024 Marks a Transformative Year for Corporate Restructuring in the UAE
The restructuring environment in the United Arab Emirates evolved significantly in 2024, driven by three major corporate restructurings and the introduction of a new bankruptcy law that replaced the 2016 legislation. These developments signal a major step forward in the UAE’s ambition to align with global best practices and create a more efficient and effective restructuring framework.
The landmark restructurings of Drake and Scull, JBF RAK, and Emirates Hospitals Group—each featuring complex, multi-creditor capital structures—were expertly handled by A&O Shearman. These were the first large-scale restructurings to be ratified by UAE courts under the new regime and marked a departure from previously required fully consensual processes. They reflect a growing maturity and sophistication in the UAE’s approach, comparable to international standards.
Global Influence: UAE Adopts Proven International Restructuring Frameworks
The overhaul of the UAE bankruptcy regime was heavily informed by successful restructuring models from around the world. Policymakers engaged with the World Bank over several years, drawing heavily from elements of the U.S. Chapter 11 process. As a result, the updated regime now includes critical features such as:
- The ability to cram down dissenting creditors
- A legal framework for priority financing during court-sanctioned restructurings
All three high-profile restructurings in 2024 required court approval to override minority creditor objections. Notably, the Emirates Hospitals Group case featured two rounds of priority financing, with the courts showing a strong willingness to embrace international best practices. This adaptability was vital in navigating untested legal territory and laid important groundwork for future processes.
A Promising Outlook: Toward Faster and More Predictable Restructurings
Historically, restructurings in the UAE could span many years—sometimes more than a decade—due to procedural inefficiencies and limited legal precedent. While the 2024 restructurings were inherently complex and pioneering in nature, there is growing confidence that future proceedings will be significantly faster.
Several encouraging factors point to a more streamlined future:
- Increased familiarity among local banks with restructuring protocols
- Growing involvement of credit funds in distressed situations
- Enhanced understanding among judges of court-supervised restructuring dynamics
A major legislative advancement in May 2024—the establishment of specialized bankruptcy courts and a dedicated bankruptcy unit—is expected to further expedite and standardize restructuring procedures. This development aims to deliver greater consistency, legal clarity, and procedural efficiency across all future cases.
