For holders of Dubai World debt, all eyes are on December
14. That's when the next payment on the company's $26 billion
of Nakheel bonds is due, and the day when creditors can move
from planning their next move to enacting it.
Dubai World's creditors fall into two categories: those that
hold the Islamic sukuk, and those that bought classic
senior debt. Within the senior debt are two sub-groups and the
group a creditor belongs to could affect the likelihood of it
being able to make a claim.
International banks, with lending documentation structured
under English law, will have lengthy lists of exactly what
constitutes an event of default. These include covenant
breaches and the standard set of insolvency tests that result
in the immediate acceleration of the debt.
There are also bilateral agreements with local banks. These
are likely to be much shorter, less sophisticated