Dubai World’s Bankruptcy gets help
October 27, 2010 – 11:50 amDubai World has now secured complete credit support for its $24.9 billion streamlining plan said a spokesperson for this luxurious indebted City. For the past year, Dubai World has been trying to gather financial support after the global economic crises led to a complete meltdown of the city to pay off its debts.
Just last month, the state owned Dubai World indicated that nearly all its creditors had signed on to a debt restructuring plan which extends the time for the corporation to repay back its lender. This has helped avoid pricey legal squabbling and more chaos for Dubai.
Details of the agreement have not been released, which is very typical of how business is done in the Middle East. Dubai World achieved complete support after a U.S. troubled Debt Company that had refused to sign on to the agreement, sold a $5 million sliver of debt to Deutsche Bank
Dubai World had been working for months with their 70 lenders to help with a restructuring plan. The deal now guarantees creditors full repayment on the principal of their outstanding loans over a 5-8 year period. Initially the lenders had refused to sign on as Dubai World was offering very low interest rates.
For the lenders, Dubai World’s bankruptcy has been a precarious situation. Had they decided to take their case to a special tribunal set up the government, the chance of success against state owned Dubai World would have been low. It is very rare for UAE courts to favor foreign lenders. Previous experience indicates that litigation in the Middle East is protracted and usually results in decisions favoring home based corporations.
Dubai World continues to have a thriving international business ranging from hotels, Condominiums, Luxury retail wear, Seaports and even a Mega City Center Plaza on the Las Vegas strip.
Dubai is keen to move on as the recent crises have led to a severe drop in its reputation as the “Las Vegas” of the Middle East. This new restructuring plan is just the beginning for Dubai World. It is estimated by the IMF that the emirates still owes billions of dollars to other state owned companies. What this means is that this is not the time to buy Real Estate in Dubai.
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