Drydocks World's use of Decree 57, which established the Dubai World Tribunal, is a landmark for the development of business practice in Dubai, some experts say.
But others want more clarity on the details of the deal the company has reached with its financial creditors, which are owed US$2.2 billion (Dh8.08bn).
"It's a good thing for the UAE. One of the biggest problems in the country was the absence of any procedure for dealing with bankruptcy, apart from straight default," said Said Hirsh, a Middle East analyst at the consultancy Capital Economics in London. "Creditors will favour a procedure that allows companies to organise insolvency."
Decree 57 was issued in November 2009 by Sheikh Mohammed bin Rashid, Vice President of the UAE and Ruler of Dubai, at the height of the crisis over debts at Dubai World, a government-owned conglomerate.
In theory, it enabled Dubai World to use the independent courts of the Dubai International Financial Centre to adjudicate claims by creditors against subsidiaries of the indebted company and put in place a "voluntary restructuring proposal" to repay debts.
But until Drydocks' move, it had not been used. Dubai World, advised by the restructuring specialist Aidan Birkett, was able to reach a unanimous agreement with creditors owed almost $25bn, which involved extending repayment terms from between five to eight years, with a "haircut" of between 60 and 80 per cent.
Drydocks' readiness to use the decree reflects two facts, bankers said: its debts were proportionally higher than Dubai World's; and some creditors were more inclined to force the issue of the bankruptcy procedure.
Khamis Juma Buamim, the Drydocks World chairman, was careful not to spell out the new terms with creditors. "We have agreed on a sustainable level of debt over a five-year period to start with, and we will let you know of any details of a haircut as and when," he said.
Mr Hirsh said more data would have been appreciated. "It would have been better from an investor perspective to get more details on the new terms."
The loan was taken out in 2006 to fund the purchase of assets in Singapore and Indonesia.
"South East Asia as a project has not been a success, and we cannot service the debt taken out to buy it," said Mark Hyde of Clifford Chance, Drydocks World's lawyers.
Mr Buamim said the issue had been complicated by cross-guarantees between Singaporean and other shareholders. Drydocks is considering selling its South East Asian business, or doing a deal with a joint-venture partner.
The procedure in Singapore is not involved with bankruptcy but corporate law, he stressed.
The "holdouts" - creditors who are not part of the 75 per cent grouping that accepted the new terms - have the option of pursuing actions against Drydocks World in foreign courts. But they face hurdles in enforcing in Dubai any rulings by foreign courts. Most of the company's assets are located in Dubai.
The possibility of asking the Dubai Financial Support Fund for help in meeting the repayments has never been considered, Mr Buamim said.
