In a UAE insolvency the financial expert answers three questions the court cannot answer from the file: which claims are genuine and for how much, what happened to the money in the period before the filing, and whether the company's own records support what its directors say. The framework is Federal Decree-Law No. 51 of 2023 on Financial Restructuring and Bankruptcy, in force since 1 May 2024. The expert's work sits underneath it, and it is accounting work, not a legal opinion on whether the company should be liquidated.
Verifying Claims
The first task in almost every insolvency is establishing the size and validity of the claims against the estate. Creditors submit what they say they are owed, and those submissions are frequently wrong in both directions.
Verification works from the company's records outward. Does the claimed amount reconcile to the ledger, and if not, what accounts for the difference: unrecorded invoices, disputed deliveries, credit notes never issued, interest or penalties added after default. Is the claim supported by a contract and by evidence of performance. Where a creditor is also a related party, does the debt reflect a real transaction or a balance created to increase that party's share of a shrinking pool.
Related-party claims deserve separate treatment for that reason. They are not improper by nature, but a shareholder loan documented after the fact, or a management fee accrued only in the final year, changes who gets paid and by how much.
Ranking is the other half of the exercise. Establishing that a debt is genuine settles only whether it is admitted, not what it receives. Where security is claimed, the analysis asks when it was granted, what it covers, and whether the underlying advance can be traced into the company. A charge registered over an asset the company had already sold, or security granted for a debt that predates it by two years, changes the position of every other creditor in the distribution.
Tracing Pre-Insolvency Transfers
Companies rarely fail suddenly, and the months before a filing usually show the pattern. The expert reconstructs the flows in that period and identifies transactions that treated one creditor differently from others, moved assets out of reach, or lacked a commercial basis.
Typical findings include payments made to a related party while trade creditors went unpaid, assets sold below value to a connected buyer, security granted late for a pre-existing debt, and salary or bonus payments to management out of line with previous years. Each of these is an accounting observation, and each raises a legal question the court decides on the facts the expert establishes.
The starting point is the date the company became unable to pay its debts as they fell due. That is a factual question the expert can address from the cash position, the ageing of payables, and the pattern of returned payments, and it matters because it fixes the period the transfers are measured against.
Timing constrains this work more than technique does. Every month between the last reliable set of accounts and the appointment is a month in which records are archived, systems are switched off for non-payment, staff who knew the entries leave, and email is deleted. An examination commissioned promptly usually recovers a complete picture; the same examination a year later recovers a partial one, and the difference is not the expert's method but what still exists to examine.
Intercompany balances within a group are the other recurring complication. Where the insolvent entity sits inside a structure that shared staff, premises, and a treasury function, the balances between the entities are frequently the largest single item on the balance sheet and the least documented. The expert establishes whether each balance reflects a real transfer of value, whether it was ever settled in cash, and whether the pricing between the entities was commercial, because the answer decides whether an intercompany claim ranks alongside external creditors or falls away.
Director Liability Analysis
Where the question is whether directors continued to trade after the company was no longer viable, the analysis is documentary. When did the accounts show liabilities exceeding assets. What did the management information available to the board show at each point, and what did the board minutes record. Were forecasts prepared, and were they supported by anything.
The expert's role is to establish what the directors knew or could have known from the financial information in front of them, and when. Whether that amounts to liability is for the court. An expert who states that a director acted improperly has crossed from accounting into adjudication, which is a straightforward ground of objection.
Where the conduct extends to misappropriation rather than mismanagement, the criminal route is separate: embezzlement of movables entrusted to a person is an offence under Article 453 of Federal Decree-Law No. 31 of 2021 on Crimes and Penalties. That is a different process with a different standard of proof, and it does not wait for the insolvency to conclude.
The Three Procedures, in General Terms
Federal Decree-Law No. 51 of 2023 provides distinct routes rather than a single bankruptcy process, and the expert's work differs across them.
- Preventive settlement, where a debtor still able to operate seeks protection while agreeing terms with creditors. The financial question is whether the business is viable, so the work centres on forecasts, working capital, and the credibility of the plan.
- Restructuring, where the capital structure itself is reorganised. The work is valuation-heavy: what the business is worth as a going concern against what creditors would receive on a break-up.
- Bankruptcy and liquidation, where the business is not viable. The work turns to realising assets, verifying claims, and establishing the distribution.
The distinction that matters financially is between going-concern value and liquidation value. Creditors asked to accept a plan are being asked to accept less now against more later, and that comparison is the expert's central output.
Creditors evaluating a plan should read the comparison rather than the headline percentage. A proposal offering sixty per cent over four years is better than thirty per cent now only if the business generating that sixty per cent is credible, and the credibility rests on the same forecast assumptions the expert examines: the order book, the working capital required to service it, and whether the projected margin has ever been achieved historically.
Why the Records Decide the Outcome
An insolvency examination is constrained by what survives. Where the accounting stopped being maintained months before the filing, the analysis becomes a reconstruction from bank statements and third-party records, which is slower, more expensive, and less precise.
Under Part 10 of Federal Decree-Law No. 35 of 2022 on Evidence, Articles 109 to 125, a court-appointed expert can request the books and records under Article 115, and a refusal is referred back to the court under Article 116. That reach is the practical advantage of a court appointment in an insolvency, where the people holding the records often have the least interest in producing them. Appointed experts practise under Federal Decree-Law No. 21 of 2022 Regulating the Profession of Experts before Judicial Authorities, which replaced Federal Law No. 7 of 2012.
The same point applies to the debtor's side. A company that can hand over a clean trial balance, reconciled bank records, and an ageing schedule at the moment it files is in a materially stronger position than one that cannot, because its own figures become the starting point rather than something to be reconstructed and doubted. Preparing that package before filing is one of the few things a distressed company can still control.
How AABDxb Helps
AABDxb prepares financial analysis for UAE insolvency proceedings, including claim verification, reconstruction of pre-filing transfers, going-concern and liquidation valuations, and the financial record underlying director conduct questions. The firm is led by a Ministry of Justice registered court-appointed accounting expert and a Ministry of Economy licensed auditor, so the accounting and the evidential standard are addressed together.