Drydocks World has convinced a special court in Dubai to grant an order allowing a US$2.2 billion (Dh8.08bn) debt deal to go ahead against the wishes of hedge fund creditors.
The owner of the Middle East's largest shipyard broke the impasse in negotiations over its debt restructuring after it secured an accord among 97 per cent of lenders at a meeting last month, the Dubai World Tribunal heard yesterday.
"The sanctioning of the company voluntary arrangements concludes the formal approval of Drydocks World Dubai's debt restructuring proposals," Drydocks told Reuters following the hearing.
In April, the company approached the Dubai World Tribunal, which was set up in the wake of the 2009 debt crisis at its parent, Dubai World, seeking protection under the as-yet-untested insolvency protection regime known as Decree 57.
Decree 57 is a creditor protection law modelled on international best practice.
The suit is an important test case for the law, which allows restructurings to be approved if agreement is reached by a two-thirds majority of creditors.
The financial details of the restructuring have not been made available yet but bankers said they were braced for a significant haircut.
Monarch Alternative Capital, with an interest of about $45 million, opposed the restructuring proposal. A spokeswoman for the firm declined to comment on the outcome of the hearing.
The hedge fund successfully sued Drydocks World through Singapore's high court in March, winning $45.5m.
The other creditor is JPMorgan, which has an interest of about $5m and abstained in last month's vote. The bank also declined to comment.
Hedge funds have made life difficult for companies attempting debt restructurings in the Arabian Gulf during the past year.
Arcapita, a Bahraini investment bank, was forced to seek Chapter 11 creditor protection in the United States when its debt negotiations met with opposition from distressed-debt investors.
ghunter@thenational.ae
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