DIFC Insolvency Law

Repeals and replaces the Insolvency Law 2009 and provides for rehabilitation of distressed DIFC companies (including an administration regime), company voluntary arrangements, receivership and winding up, and for the registration and supervision of insolvency practitioners. Consolidated Version No. 3, July 2025.

Summary

The Insolvency Law, DIFC Law No. 1 of 2019, is the DIFC's code for rescuing, restructuring and winding up companies. Made by the Ruler of Dubai, it repealed and replaced the Insolvency Law 2009 (Article 1), is administered by the Registrar of Companies (Article 6) and applies throughout the DIFC. The copy read is Consolidated Version No. 3 of July 2025, as amended by DIFC Laws Amendment Laws No. 2 of 2022, No. 3 of 2024 and No. 1 of 2025, and the index records enactment on 30 May 2019 and commencement on 13 June 2019.

The Law offers routes short of liquidation. Part 2 provides company voluntary arrangements. Part 3 is the rehabilitation regime: when the board notifies the Court that it intends to propose a rehabilitation plan, an automatic moratorium binds all creditors, secured or unsecured, for 120 days unless the Court orders otherwise, insolvency-triggered termination clauses are suspended, and the plan goes to a creditors' vote and Court sanction (Articles 15 to 31). Part 4 lets creditors apply for an administrator where a rehabilitation application has been made and there is evidence of misconduct (Article 32). Part 5 governs receivers.

Part 6 is winding up. A company may be wound up voluntarily by special resolution (Article 54), advertising the resolution within 14 days (Article 55); it ceases business but keeps its corporate powers until dissolved (Article 57). A members' voluntary winding up requires the directors' statutory declaration that the company will pay its debts in full within 12 months, made within the five weeks before the resolution and filed with the Registrar within 30 days; a director who declares without reasonable grounds faces a fine of up to USD 20,000 (Article 59). If the liquidator finds the company insolvent the process converts to a creditors' voluntary winding up (Article 65). The Court may wind up a company unable to pay its debts, presumed where a creditor owed more than USD 2,000 serves a written demand that goes unpaid for three weeks, where execution is returned unsatisfied, or where current liabilities exceed current assets (Article 82); applications may be made by the company, its directors or creditors (Article 83) and by the DIFCA (Article 84). Preferential debts rank first (Article 99).

Articles 107 to 116 deal with misconduct: fraudulent trading, wrongful trading by directors who knew or ought to have known there was no reasonable prospect of avoiding insolvent liquidation (Article 113), and the Court's power to order repayment, compensation and contributions (Article 115); a director of a company in insolvent liquidation may not reuse its name for five years (Article 116). Undervalue transactions and preferences within two years for connected persons or six months otherwise can be reversed (Articles 131 to 134). Part 10 provides for the registration and supervision of insolvency practitioners, and Article 137 lets the Registrar impose the fines in Schedule 5 by notice.

Who it applies to

Every company incorporated or continued in the DIFC, together with recognised and foreign companies and limited liability partnerships so far as Parts 7 to 9 provide; their directors, shadow directors, shareholders and officers; secured, preferential and unsecured creditors; nominees, administrators, receivers and liquidators; and insolvency practitioners registered with the Registrar.

Contents

English official text in 138 articles. Open the full text or jump to a provision:

1. Article 1 — Title and repeal
2. Article 2 — Legislative Authority
3. Article 3 — Application of this Law
4. Article 4 — Date of enactment and commencement
5. Article 5 — Interpretation
6. Article 6 — Administration by the Registrar
7. Article 7 — Company arrangements
8. Article 8 — Moratorium
9. Article 9 — Consideration of proposal
10. Article 10 — Decisions of the Company and its creditors
11. Article 11 — Effect of approval
12. Article 12 — Implementation of proposal
13. Article 13 — Scope
14. Article 14 — Common provision of the Regulations that apply under this Part
15. Article 15 — Application for Rehabilitation Plan and automatic moratorium
16. Article 16 — Moratorium period
17. Article 17 — Effect of the moratorium
18. Article 18 — Effect of the moratorium on contracts
19. Article 19 — Relief from the moratorium
20. Article 20 — Appointment of the Rehabilitation Nominee
21. Article 21 — Qualification of the Rehabilitation Nominee
22. Article 22 — Management of the Company
23. Article 23 — Termination and expiration of the moratorium period
24. Article 24 — Directions Hearing
25. Article 25 — Meeting and voting requirements
26. Article 26 — Challenges to the Rehabilitation Plan
27. Article 27 — Post Plan Hearing and Court sanction
28. Article 28 — No Court sanction and winding up
29. Article 29 — Effect of Court sanction
30. Article 30 — Discretionary relief in conjunction with a Rehabilitation Plan
31. Article 31 — Priority funding
32. Article 32 — Application for an order appointing an Administrator
33. Article 33 — Effect of order
34. Article 34 — Moratorium
35. Article 35 — Common provisions of the Law and Regulations that apply under this Part
36. Article 36 — General powers
37. Article 37 — General duties
38. Article 38 — Protection of interests of creditors and Shareholders
39. Article 39 — Discharge or variation of order appointing an Administrator
40. Article 40 — Vacation of office
41. Article 41 — Release of Administrator
42. Article 42 — Powers of Receivers and Administrative Receivers
43. Article 43 — Notification that Receiver appointed
44. Article 44 — Interaction of Receivers and Administrative Receivers
45. Article 45 — No duty to enquire as to power of Receiver and Administrative Receiver
46. Article 46 — Power to dispose of property subject to a Security Right
47. Article 47 — Agency and liability for contracts
48. Article 48 — Vacation of office
49. Article 49 — Report by Administrative Receiver
50. Article 50 — Committee of creditors
51. Article 51 — Alternative modes of winding up
52. Article 52 — Regulations
53. Article 53 — Powers of Liquidator
54. Article 54 — Circumstances in which a Company may be wound up voluntarily
55. Article 55 — Notice of resolution to wind up
56. Article 56 — Commencement of winding up
57. Article 57 — Effect on business and status of Company
58. Article 58 — Avoidance of share transfers after winding-up resolution
59. Article 59 — Statutory declaration of solvency
60. Article 60 — Members’ Voluntary Winding Up
61. Article 61 — Appointment of Liquidator
62. Article 62 — Liquidator's report at each year's end
63. Article 63 — Final account
64. Article 64 — Effect of Company's Insolvency
65. Article 65 — Conversion to Creditors' Voluntary Winding Up
66. Article 66 — Application of this Chapter
67. Article 67 — Directors to lay statement of affairs before creditors
68. Article 68 — Appointment of Liquidator
69. Article 69 — Appointment of Liquidation Committee
70. Article 70 — Directors' powers
71. Article 71 — Power to disclaim onerous property and vesting of property
72. Article 72 — Vacancy in office of Liquidator
73. Article 73 — Liquidator's report at each year's end
74. Article 74 — Final account
75. Article 75 — Distribution of Company's property
76. Article 76 — Appointment or removal of Liquidator by the Court
77. Article 77 — Reference of questions to Court
78. Article 78 — Expenses of voluntary winding up
79. Article 79 — Saving for certain rights
80. Article 80 — Removal or resignation of Liquidator
81. Article 81 — Circumstances in which Company may be wound up by the Court
82. Article 82 — Definition of inability to pay debts
83. Article 83 — Application for winding up
84. Article 84 — Application for winding up on grounds of interests of the DIFC
85. Article 85 — Voiding of property dispositions
86. Article 86 — Voiding of attachments
87. Article 87 — Commencement of winding up by the Court
88. Article 88 — Consequences of winding-up order
89. Article 89 — Investigation procedures
90. Article 90 — Choice of Liquidator by creditors and Contributories
91. Article 91 — Appointment of provisional Liquidator
92. Article 92 — Liquidation Committee
93. Article 93 — General functions in winding up by the Court
94. Article 94 — Vesting of Company property in Liquidator
95. Article 95 — Final account
96. Article 96 — Power to stay proceedings
97. Article 97 — Power to exclude creditors not proving in time
98. Article 98 — Payment of expenses of winding up
99. Article 99 — Preferential debts
100. Article 100 — Power to disclaim onerous property
101. Article 101 — Liquidator’s Report at each year’s end
102. Article 102 — Reference of questions to Court
103. Article 103 — Removal or resignation of Liquidator
104. Article 104 — Notification that Company is in Liquidation
105. Article 106 — Dissolution and early dissolution
106. Article 107 — Fraud in anticipation of winding up
107. Article 108 — Transactions in fraud of creditors
108. Article 109 — Falsification of Company's books
109. Article 110 — Material omissions from the Statement of Affairs
110. Article 111 — False representations to creditors
111. Article 112 — Fraudulent trading
112. Article 113 — Wrongful trading
113. Article 114 — Misconduct in course of winding-up
114. Article 115 — Remedy
115. Article 116 — Restriction on re-use of Company names
116. Article 117 — Proceedings in respect of Foreign Companies
117. Article 118 — Application of this Part in relation to Recognised Companies
118. Article 119 — Winding up Recognised Companies
119. Article 120 — Application of the Law to other types of Company
120. Article 121 — Application to Limited Liability Partnerships
121. Article 122 — Restrictions on service as Liquidator or Receiver
122. Article 123 — Qualification and registration of insolvency practitioners
123. Article 124 — Register of insolvency practitioners and official Liquidators
124. Article 125 — Obligation of disclosure to the Registrar
125. Article 126 — Supervision of insolvency practitioners
126. Article 127 — Power to make Regulations and waivers and modifications of the Law and Regulations
127. Article 128 — Getting in the Company's property
128. Article 129 — Duty to co-operate with office-holder
129. Article 130 — Inquiry into Company's dealings
130. Article 131 — Transactions at an undervalue
131. Article 132 — Preferences
132. Article 133 — Invalid Security Rights
133. Article 135 — Application of other laws in relation to receivership and winding up
134. Article 136 — Power of Court to declare dissolution of Company void
135. Article 137 — Contraventions and administrative notice of fine
136. Article 138 — Remote attendance at meetings
137. Article 139 — Use of websites
138. Article 140 — Public Register

Key provisions

Obligations and deadlines

• Advertise a voluntary winding-up resolution within 14 days of passing it (Article 55).
• Directors must make the solvency declaration within five weeks before the resolution and file it within 30 days (Article 59).
• Cease business other than for winding up once a voluntary winding up commences (Article 57).
• Directors must stop trading or take every step to minimise creditor losses once insolvent liquidation is unavoidable (Article 113).
• Officers and relevant persons must cooperate with the liquidator or office-holder (Articles 53 and 129).
• Do not reuse the name of a company in insolvent liquidation for five years without leave (Article 116).
• Notify the DFSA where the company is an authorised person (Articles 32, 55 and 59).

Penalties

Schedule 5 fixes the Registrar's maximum fines: USD 20,000 for a director who makes a solvency declaration without reasonable grounds (Article 59); USD 15,000 for an officer or relevant person who fails to cooperate with or account to the liquidator or office-holder (Articles 53, 129 and 130); USD 10,000 for reusing a liquidated company's name (Article 116); USD 5,000 for a liquidator who misses a year-end report or final account; and USD 100 a day for an administrator who fails to file Court orders. Beyond fines, the Court may order directors and others found liable for fraudulent or wrongful trading or misconduct to repay property, compensate the company or contribute to its assets (Article 115), and may reverse undervalue transactions and preferences (Articles 131 to 134).

History and citations

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