Made under Article 127 of the Insolvency Law 2019, the Regulations set the procedures for voluntary arrangements, rehabilitation plans, moratoria, receiverships and winding up, the registration requirements for insolvency practitioners, and special rules for financial-market and protected cell companies.
The DIFC Insolvency Regulations are the procedural rulebook under the Insolvency Law, DIFC Law No. 1 of 2019. The Board of Directors of the DIFC Authority made them under Article 127 of that Law, and the copy read is Consolidated Version No. 2, in force on 8 March 2024, which adds digital-asset provisions following the Digital Assets Law No. 2 of 2024. They apply to any person to whom the Law applies (Regulation 1.1.1), which means DIFC companies, their directors, creditors and shareholders, and the insolvency practitioners who act for them.
The Regulations follow the Law's procedures. Part 2 governs voluntary arrangements: the proposal, statement of affairs, creditor meetings and the requirement that a proposal be approved by a majority in excess of three-quarters in value of creditors present and voting (Regulation 2.5), after which a supervisor takes over the property. Part 3 sets what a rehabilitation plan must contain. Part 4 covers the moratorium: eligibility, from which deposit-takers, insurers, custodians of client money and parties to financial collateral or clearing arrangements are excluded (Regulation 4.4), and its effect, which bars winding-up petitions and resolutions, administrative receivership, forfeiture of leases and enforcement of security without the Court's leave (Regulation 4.5). Part 5 deals with receivers, including notices, statements of affairs and disposal of collateral.
Part 6 is the largest and governs winding up. A creditor's statutory demand under Article 82(1)(a) of the Law must be dated, signed, state the debt and warn that winding-up proceedings may follow (Regulation 6.1); petitions are served on the company and filed in Court (Regulation 6.2). Creditors prove their debts in writing to the liquidator with the amount at the date of liquidation, security held and reservation of title (Regulation 6.16); mutual credits are set off, foreign-currency and digital-asset debts are converted, and interest and future debts are dealt with under Regulations 6.25 to 6.29. Unsecured debts rank equally after preferential creditors, secured creditors and trust beneficiaries (Regulation 6.47), liquidation expenses are paid in the order in Regulation 6.52, and the liquidator gives notice of a final dividend, holds a final creditors' meeting and files notice with the Court to obtain release (Regulations 6.32 and 6.49). Regulation 1.4 confines a members' voluntary winding up to the accounts, proof-of-debt and general provisions, so a solvent liquidation runs on a shorter set of rules. Appendices 1 and 2 govern creditor and committee meetings and Appendix 4 the liquidator's report.
Part 7 fixes who may act: members of a professional body recognised by the Registrar, persons approved by the Court or persons approved by the Registrar, whose approval may be conditioned, suspended or revoked (Regulations 7.1 to 7.3); bonding requirements exist but are waived until the Registrar directs otherwise (Regulation 7.4). Parts 8 to 10 cover financial-market default rules, protected cell company receiverships and permission to use a prohibited name. The Regulations remain in force.
Every company and other person to whom the DIFC Insolvency Law 2019 applies: DIFC companies in or approaching insolvency, their directors and shareholders, secured, preferential and unsecured creditors proving debts, nominees, supervisors, receivers and liquidators, insolvency practitioners seeking recognition, and authorised market institutions and protected cell companies under Parts 8 and 9.
| Regulation 1.1 | The Regulations apply to any person to whom the Insolvency Law 2019 applies; currency includes a digital asset that is money, and defined terms draw on the Personal Property Law, Security Law, Netting Law and Digital Assets Law. |
| Regulation 1.4 | In a members' voluntary winding up only Regulations 6.5 to 6.7, 6.16 to 6.30, 6.56 and 6.57 to 6.61 apply, and in a creditors' voluntary winding up the statutory demand, petition and first-meeting rules do not apply. |
| Regulation 2.5 | A voluntary arrangement proposal or modification is approved only by a majority in excess of three-quarters in value of the creditors present in person or by proxy and voting, after which the meeting appoints a supervisor. |
| Regulations 4.4–4.5 | A company is eligible for a moratorium unless it is an authorised person taking deposits, insuring, holding client investments or money, or is party to financial collateral or clearing arrangements; during the moratorium no winding-up petition, resolution, administrative receiver, lease forfeiture or security enforcement may proceed without the Court's leave. |
| Regulation 6.1 | A creditor's written statutory demand under Article 82(1)(a) of the Law must be dated and signed, state the amount and origin of the debt, explain that winding-up proceedings may follow and give payment and contact details. |
| Regulation 6.16 | A creditor of a company wound up by the Court proves its debt by written claim to the liquidator stating its name, the amount at the date of liquidation including VAT, any uncapitalised interest, how the debt arose, any security and its value, and any reservation of title. |
| Regulation 6.32 | The liquidator calls a final creditors' meeting, lays the liquidator's report with the amount paid to unsecured creditors, and files notice with the Court; release follows on filing unless creditors resolve against it, in which case the Court decides. |
| Regulation 6.47 | Debts other than those of preferential creditors, secured creditors and trust beneficiaries rank equally and are paid in full after those classes, abating proportionately if assets are insufficient; commingled digital-asset trust claims abate proportionately among beneficiaries. |
| Regulation 6.52 | Liquidation expenses are paid from the assets in a fixed order, starting with the liquidator's costs of preserving and realising assets and conducting proceedings, then other disbursements, Court and official fees, deposits, security costs and the provisional liquidator's remuneration. |
| Regulations 7.1–7.3 | A person is qualified to act as an insolvency practitioner if a member of a professional body recognised by the Registrar, if the Court so orders, or if approved by the Registrar, who may impose conditions and may suspend or revoke approval in the interests of the DIFC. |
| Regulation 7.4 | Registration or appointment of an insolvency practitioner carries security requirements that may include bonding under Regulations 7.5 to 7.9 and professional liability insurance, but the bonding requirements are waived until the Registrar directs otherwise. |
The Regulations set no fines of their own; sanctions sit in the Insolvency Law 2019, which penalises directors who continue trading while insolvent and provides for disqualification and the setting aside of transactions, and in the Registrar's power under Regulation 7.3.4 to suspend or revoke an insolvency practitioner's approval. A liquidator who is refused release by creditors must seek it from the Court (Regulation 6.32.6).
When a client's DIFC company has reached the end of its life we usually run a members' voluntary winding up, and Regulation 1.4 is what keeps that process short: only the accounts, proof-of-debt and general office-holder rules apply, so a solvent liquidation turns on the directors' solvency statement, the appointment of a recognised liquidator and the creditor notices and final distribution. We prepare the statement of affairs, the shareholder resolutions and the notices, appoint a practitioner recognised under Part 7, and manage the proof-of-debt and final-meeting steps through to deregistration. Where a company is insolvent we advise the directors on the moratorium and voluntary arrangement routes before a creditor serves a statutory demand, because the three-quarters creditor majority and the Court filings in Parts 2 and 6 decide whether a rescue or a winding up follows. Registered-office and filing work is coordinated with a DIFC-registered provider.
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