Tuesday, 15 December 2009

What Dubai debt rescue boils down to

Abu Dhabi’s eleventh-hour US$10 billion (Dh36.72bn) rescue package has averted what could have been a lengthy legal battle over the $3.52bn in bonds that Nakheel was due to pay Monday, and given time to restructure the rest of Dubai World and its debts.

Analysts and executives said the new aid had also set important new legal and economic precedents. Yesterday’s announcement was followed by a new decree establishing a legal framework for Dubai World’s reorganisation that could help other companies and creditors by filling several gaps in the UAE’s bankruptcy laws.

Most importantly, analysts said, the aid package marked a new level of financial co-operation between Abu Dhabi and Dubai that could fundamentally change the way the two emirates approach development, with greater co-operation and planning.

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