Replaces the 2016 Bankruptcy Law from 1 May 2024: it creates specialised Bankruptcy Courts supported by a Bankruptcy Department, provides a debtor-led preventive settlement to keep a business trading under an approved plan, a restructuring procedure and a bankruptcy liquidation with distribution to creditors, with trustees and controllers appointed to run and supervise each process.
Federal Decree-Law No. 51 of 2023 promulgates the Financial Restructuring and Bankruptcy Law that replaced the 2016 Bankruptcy Law. The decree repeals Federal Decree-Law No. 9 of 2016 (Article 5) and takes effect six months after publication (Article 7); it was issued on 2 October 2023 and the portal records 1 May 2024 as the effective date. It is in force and unamended.
Article 3 applies the Law to companies subject to the Commercial Companies Law, natural persons with trader status and licensed professional civil companies. It does not apply to government-owned companies with their own insolvency rules, free zone entities governed by special provisions, Central Bank-licensed banks, financial institutions and insurers, or debts incurred for personal, family or consumer purposes. Cessation of payment is defined in Article 1 as failing to pay a due debt more than 10 days after its deadline, even if the debtor's assets cover its debts.
Articles 5 and 9 to 11 create specialised Bankruptcy Courts and a Bankruptcy Department that receives applications, serves notices and oversees asset management. Article 15 allows the debtor to apply for preventive settlement or bankruptcy and requires it to do so within 60 days of cessation of payment; from the filing the debtor may not dispose of its property. An ordinary creditor may apply where its debt is unconditional, undisputed and payable, exceeds the minimum set by the executive regulations and remains unpaid 30 days after a notice to pay (Article 16). Trustees are court-appointed and must be independent of the debtor (Articles 36 and 41).
Preventive settlement (Articles 56 to 86) is debtor-led: a debtor that has defaulted or expects to be unable to pay may apply, claims are suspended for three months from the initiation decision, extendable by a month at a time to six months (Article 59), contracts continue and debts are not accelerated (Article 61), new financing may rank ahead of ordinary debt (Article 62), the plan is due within three months, extendable to six (Article 67), and approval requires creditors holding more than half the debt present and a vote of two-thirds of the debt represented (Article 72), followed by court ratification (Article 75).
Restructuring (Articles 87 onwards) is open to a viable but insolvent business. The debtor keeps running the business under trustee supervision (Article 89), although the court may displace management (Article 90); claims are suspended from the day after initiation until ratification (Article 92); creditors have 30 days to lodge claims (Article 95) and the trustee verifies debts within 30 days (Article 100). Bankruptcy proper is the collective liquidation of assets and distribution of proceeds, with secured and preferential creditors ranking ahead of ordinary creditors (Article 1).
Companies subject to the Commercial Companies Law, natural persons with trader status and licensed professional civil companies that are insolvent or in financial distress, and their creditors, trustees and guarantors. Excluded: government-owned companies with special insolvency rules, free zone entities under their own provisions, Central Bank-licensed banks, financial institutions and insurers, and consumer or family debts.
| Article 1 | Defines cessation of payment as failure to pay a due debt more than 10 days after its deadline, regardless of whether assets cover liabilities, and ranks creditors into ordinary creditors and those holding mortgages or special or general liens. |
| Article 3 | Applies the Law to companies under the Commercial Companies Law, natural persons who are traders and licensed professional civil companies; excludes state-owned companies with their own rules, free zone entities under special provisions, Central Bank-licensed institutions and consumer debts. |
| Articles 5 and 9–11 | Designates Bankruptcy Courts within the federal and local courts and creates a Bankruptcy Department, headed by a judge of at least appeal-judge rank, to receive and register applications, serve notices and oversee asset management. |
| Article 15 | The debtor may apply for preventive settlement or bankruptcy and must do so not later than 60 days from the cessation of payment; late filing does not bar the application, but from the filing the debtor may not dispose of its property except for necessities. |
| Article 16 | An ordinary creditor may apply where its debt is unconditional, undisputed and payable, meets the minimum set by the executive regulations and remains unpaid 30 days after a notice to pay. |
| Article 41 | A trustee may not be a creditor, a related party or anyone who was a partner, employee, auditor or attorney of the debtor in the two years before the application. |
| Article 56 | A debtor may apply for preventive settlement where its business is vulnerable because it has defaulted or has reason to expect or fear inability to repay all or part of its debts when due, subject to waiting periods after a rejected proposal or earlier termination. |
| Article 59 | The decision to initiate preventive settlement suspends claims for three months, which the court may extend by up to one month at a time to a maximum of six months. |
| Articles 61–62 | Initiation does not accelerate debts or stop interest, and valid contracts including leases are not suspended or terminated by it; the court may authorise new financing that ranks ahead of existing ordinary debt. |
| Articles 67 and 72 | The settlement proposal is due within three months, extendable to six; approval needs creditors holding more than half the debt present and a vote of creditors holding two-thirds of the debt represented, with a second meeting ten days later if the first fails. |
| Articles 89–92 | In restructuring the debtor keeps running the business under trustee supervision, the court may remove management within 10 days and vest its powers in the trustee, and claims are suspended from the day after initiation until the plan is ratified. |
| Articles 95–101 | The trustee announces the proceedings and creditors have 30 days to lodge claims, converted into dirhams at the initiation-day rate; the trustee verifies debts within 30 days and files a list, which may be challenged within 10 days. |
The portion of the text available for reading contains no fines or imprisonment; Article 33 provides compensation for abusive applications, Article 81 allows termination of a preventive settlement for fraud, serious mismanagement or refusal to provide information, and Article 15 invalidates dispositions of property made after a bankruptcy filing.
Insolvency reaches us from two directions. When a client company stops paying its debts, we explain that Article 1 treats a debt 10 days overdue as cessation of payment even if the balance sheet is solvent, that Article 15 expects an application within 60 days and that the company's assets are frozen from the filing date, so a liquidation we are asked to run informally cannot proceed once the company is in that position. We point directors to the preventive settlement route in Articles 56 to 75 while the business is still viable, because the three-month moratorium and the two-thirds creditor vote give them a realistic chance of keeping the licence alive. When a client is the creditor, we check that its debt is undisputed and payable, serve the 30-day notice required by Article 16 and diarise the 30-day claim window once a trustee announces proceedings. Free zone companies need a separate check, since Article 3 excludes entities covered by their zone's own insolvency rules.
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