UAE Emergency Bankruptcy Relief Available to Businesses Hit by Iran War

Companies in the United Arab Emirates that have been financially hurt by the Iran war can now apply for emergency bankruptcy protection. The relief is backdated to February 28, 2026, the day hostilities escalated, and it will remain in place until the Cabinet decides to end it.

The legal basis is Cabinet Decision No. 94/2026, issued June 1, 2026. That decision activates Title 5 of Federal Decree-Law No. 51/2023, the Emirates' Financial Reorganization and Bankruptcy Law. The result is a dedicated emergency route for restructuring, separate from the normal bankruptcy process.

A company qualifies only if it can demonstrate a direct link between its financial trouble and the war. Once that link is established, the Bankruptcy Court can approve the application without appointing a trustee. That matters. It leaves the existing management in charge of the operation while creditors are held at bay.

Qualifying businesses may ask the court for up to 40 days to negotiate a settlement with creditors. If an agreement is reached, it can run for up to 12 months from court approval. The threshold is high: creditors holding at least two-thirds of the value of participating debts must support it. Once that threshold is met, the settlement is binding on all creditors, including those who declined to take part in talks.

Creditors have limited room to maneuver. Courts must postpone applications from creditors trying to open bankruptcy proceedings against a protected company. Assets needed to keep the business running are shielded from precautionary measures. The shield disappears if the court decides an asset has nothing to do with the operation.

Companies already in insolvency proceedings when the emergency began can also benefit. Courts are allowed to extend existing procedural deadlines by as much as twice their ordinary duration.

Directors and managers get a specific protection: they will not be held personally liable for using company assets to pay regular wages and salaries during the emergency. That protection comes with conditions. They must keep the accounts current, act cautiously and in good faith, and protect the company's objectives and financial assets.

Fresh capital is part of the design. Courts can authorize new secured or unsecured financing that ranks ahead of existing ordinary debt. The loans can be secured against mortgaged or unmortgaged assets, subject to the law's conditions.

The regime is less about rescuing insolvent companies than about insulating distressed ones from creditor pressure while the conflict continues. Management keeps control, but must meet stricter accounting duties in exchange. For creditors, the binding settlement mechanism is the sharpest edge: creditors holding two-thirds of participating debt can impose terms on everyone else, and new priority financing can push older debt further down the queue.