Dubai World’s shipbuilding unit Drydocks World is to test a form of insolvency protection, using a special tribunal to force recalcitrant creditors to sign up to its $2.2 billion debt restructuring plan.
The move, announced by Drydocks World on Monday, is the first real test of the tribunal, set up in Dubai, where Dubai World itself took centre stage, and is aimed at bringing resistant hedge funds to the table.
“We have declared that we would like to go ahead and implement the restructuring and (because of) the minority who tried to delay the process, it is appropriate that we take immediate action,” Drydocks’ Chairman Khamis Juma Buamim told reporters.
“It is incumbent on me ... to declare that I will go to court to force the issue. And we did.”
Drydocks, a shipbuilding and repair business with operations in Singapore and Indonesia as well as Dubai, also filed legal proceedings in Singapore to push through the proposal, its lawyers told the tribunal.
Drydocks said that creditors holding about 75 per cent of the debt had agreed to the deal with more than four of the total 19 lenders yet to approve the plan.
The restructuring involves a five-year moratorium on debt repayments. The debt in the restructuring would be converted into new paper and lenders will not face a haircut on the principle amount.
The company filed a notification seeking insolvency protection under Decree 57 on Sunday night, sources had told ALB The Brief, a Thomson Reuters publication.