**Published:** 2026-08-24
**Updated:** 2026-08-24
**Author:** Chanchal Singh
**Original Url:** https://www.policybazaar.ae/business-insurance/news-and-update/emergency-financial-crisis-under-uae-bankruptcy-law/

# Emergency Financial Crisis Under UAE Bankruptcy Law – 2026 Update

Businesses affected by the recent Iran-US conflict can now get temporary legal protection under the UAE’s Bankruptcy Law. The UAE has activated emergency bankruptcy rules that were already part of Federal Decree-Law No. 51 of 2023.

These measures came into effect after the UAE Cabinet’s decision on 1 June 2026, covering businesses affected by the conflict from 28 February 2026, when hostilities escalated. The goal is to give eligible businesses more time to recover from the emergency financial crisis instead of forcing them into bankruptcy.

## Creditors Cannot Force Bankruptcy

One of the biggest changes with these bankruptcy rules for business is that creditors cannot immediately push eligible businesses into bankruptcy while the emergency period is active.

Instead, businesses can ask the court for time to negotiate with banks, suppliers, and other creditors. The court can allow up to 40 days for these discussions, giving companies a chance to create a repayment plan that can last for up to 12 months.

Furthermore, if creditors who are owed two-thirds of the total money agree to a repayment plan, everyone must follow it. This helps the business continue, even if some creditors do not agree or choose not to vote.

The court may also allow the company’s existing management to continue running daily operations during the restructuring process. This helps businesses stay open while they work on improving their financial position.

## Support for Employees and New Funding

The temporary emergency bankruptcy rules for businesses also protect directors who use company funds to pay employee salaries. Businesses can also apply for new financing during the Emergency Financial Crisis period. With court approval, this funding can receive priority over older debts, making it easier for companies to secure the money they need to continue their operations.

It is also important to understand that these protections are not available to every business in the UAE. Companies must show that their financial problems are directly linked to the war with Iran. Businesses are also expected to keep proper financial records and act in good faith throughout the process.

## Why are Bankruptcy Rules for Business Important?

Legal experts claim the government has not introduced a new law. Rather, it has activated existing emergency provisions that were built into the Bankruptcy Law for exceptional situations. The experts believe these measures can prevent unnecessary business closures. This can help by giving companies time to restructure instead of collapsing under short-term financial pressure.

The emergency rules will remain in place until the UAE Cabinet officially announces the end of the Emergency Financial Crisis period.

For businesses experiencing cash flow problems, delayed payments, or financial pressure due to the conflict, these temporary protections could provide valuable time to negotiate with creditors and plan their recovery.

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### Chanchal Singh

Content Writer

Chanchal is a strategic content writer with over 5 years of experience in digital content, specialising in business and home insurance. She focuses on compliance, market trends, and practical insights that help individuals and businesses make informed decisions. Her content is built on credible sources and expert inputs, ensuring accuracy, clarity, and real value for readers.

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