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Dubai’s Drydocks World has applied for insolvency protection at a tribunal in the emirate as it seeks to push through its $2.2bn debt restructuring proposals over minority objections, according to court records.
The ship overhaul company late on Sunday notified the Dubai World Tribunal that it would file a “voluntary arrangement notification” under Decree 57, which grants the unit of troubled conglomerate Dubai World protection from any creditor claims.
People aware of the matter also say the company planned to apply for similar protection under a scheme of arrangement at 11am on Monday in Singapore (GMT03:00), where its Asian operations are based.
The Dubai World Tribunal is scheduled to meet at 2pm Dubai time on Monday (GMT10:00) at the Dubai International Financial Centre Courts, the common-law jurisdiction located in the emirate’s financial centre.
That marks the first time that a Dubai World company has used Decree 57 as a framework for financial restructuring in Dubai.
Drydocks is expected to reveal more details about its restructuring plan, which the tribunal can impose on all creditors if a two-thirds majority agree to the details.
A majority of about 76 per cent of creditors has agreed to the proposals, but a minority continues to object, say people aware of the matter.
Monarch Alternative Capital, a US-based hedge fund which holds about $45.5m in Drydocks debt, last month won a judgment in a UK court against the ship overhaul company for default. Monarch did not respond to requests for comment.
Any information on the financial impairment – or haircut – for creditors will be watched with keen interest.
The Dubai World Tribunal hearing is expected to deal with notifying creditors of the process, which emphasises a voluntary arrangement of restructuring and does not allow creditors to call for the company to be wound up, according to lawyers.
Creditors will have 60 days to notify the court of their claim from the issuance of the notification.
Dubai’s ruler issued Decree 57 to oversee the financial reorganisation of troubled conglomerate Dubai World.
In late 2009, Dubai World’s debts pushed the emirate to the brink of default until bailout loans of $20bn were issued by the United Arab Emirates and its capital Abu Dhabi.
Dubai World did not need to resort to the Dubai World Tribunal to effect its $25bn restructuring plan, which was concluded last year.
Dubai World’s creditors were asked to extend maturities between five to eight years, with the promise of full repayment of their principle loans combined with a potential economic loss on interest.