Drydocks moves tribunal on restructuring
Dubai, April 2, 2012
Dubai World's shipbuilding unit filed for insolvency protection, using a special law set up after the emirate's debt crisis, to force holdout creditors to sign on to its $2.2 billion restructuring proposal, two sources said on Monday.
Drydocks World, which has said a significant majority of its lenders had formally backed the deal, filed a notification under Decree 57 on Sunday night, sources told ALB The Brief, a Thomson Reuters publication.
"The tribunal convened late last night and issued a moratorium and a hearing has been set (for Monday)," said one source.
Decree 57 created a special tribunal for Dubai World in 2009 to deal with any litigation related to the conglomerate's $26 billion debt crisis.
The special court - which has so far only handled claims but not been tested with this kind of case - met late Sunday night and imposed a moratorium, allowing Drydocks to make a proposal to reach a voluntary arrangement with its creditors.
If that fails, the court can force holdout creditors to accept terms already adopted by the majority. A hearing before the Dubai World tribunal is slated for 1000 GMT on Monday, said the sources who spoke on condition of anonymity.
A spokesman for the special tribunal was not immediately available for comment. The tribunal was established in the Dubai International Financial Centre and incorporates elements of other international bankruptcy laws.
On Saturday, Drydocks said it had secured the necessary level of support from its syndicated lenders to implement its restructuring.
Drydocks World has been in negotiations to restructure its loan facility in an effort to put an end to lengthy and complex debt talks.
Earlier this month, the company proposed repaying creditors in five years and said it was seeking more working capital.
Drydocks World's debt restructuring, initially expected to be completed by April last year, has dragged on as the presence of hedge funds and a lack of government support curbed prospects of an amicable deal.
A US-based hedge fund Monarch Alternative Capital won a $45.5 million legal claim against Drydocks this month for defaulting on a loan, putting the ship builder's restructuring in further trouble.
The firm's debts stem from a multibillion-dollar loan it took out to fund expansion in Singapore. Its major ship and rig building facilities are in southeast Asian countries such as Singapore and Indonesia. - Reuters