It sent shockwaves around the world’s financial markets but one noticeable aspect of the US$26bn Dubai World restructuring is the silence of the big law firms involved on the matter.
At the top of the game is Clifford Chance, who declined to comment on their involvement but is advising Dubai World on the restructuring. The firm in 2006 advised Dubai World and its subsidiary Nakheel on a US$3.5bn sukuk – which is at the centre of this affair. The sukuk is due in December and Dubai World has said that Nakheel’s sukuk has US$6bn in debt to be paid. “We were delighted to work with Dubai World and Nakheel on what is a landmark transaction for many reasons, not just because of its size,” said Robin Abraham, CC partner who led the Dubai team, at the time of the deal.
On the other side of the fence are Ashurst and Denton Wilde Sapte who have confirmed they are advising bondholders and creditors on the restructuring – Dentons for “a number of creditors of different members of the Dubai World group” and Ashurst for “a group currently forming among holders, which accounts for over 25% of the nominal value of certificates.” Allen & Overy is said to be working for the commercial banks owed by Nakheel, but also declined to confirm. Creditors of Dubai World include Abu Dhabi Commercial Bank and First Gulf Bank Emirates NBD, Mashreqbank, and Dubai Islamic Bank. The firm recently advised the Government of Dubai on its inaugural sukuk issue. Meanwhile local firm Al Tamimi also declined to comment on the matter due to a conflict of interest. It is unknown whether this is in reference to former partner Abdul Wahid Al Ulama, who is the vice chairman of Dubai Natural Resources World or whether it is representing parties on the matter.
According to a lawyer from a prominent Omani firm, regional firms may receive calls from individuals as the exposure to Dubai World stretches across the Gulf. The lawyer (who declined to be named) said his firm has been receiving calls and instructions from Omani banks looking to assess their exposure to Dubai World's restructuring. “HSBC and Standard Chartered have a considerable presence in Oman as well; in fact their Dubai office deals with a lot of Omani project companies. Indirectly there may be an affect in respect to the project financings.”
A major reason why firms are remaining quiet, said a high-profile lawyer in the region, may be the politics surrounding the restructuring. “This is a very sensitive issue, you’re talking about a company (Nakheel) that the Dubai government owns as its major shareholder – the issue is highly politically charged and has garnered worldwide attention, it’s affected stock markets around the world and the reputation of a lot of important institutions and governments are on the line. You can be very sure that the law firms would be extremely circumspect in making any comment about this,” the source said.
But beyond the political issues, Dubai World’s restructuring could affect law firms in other ways, by bringing in more work for the region’s firms. It will reportedly be the first time that Dubai restructuring laws and Islamic finance will face serious tests. “It will generate a fair amount of finance-based work for law firms in the region and also in London and New York,” said the head Denton Wilde Sapte’s restructuring and insolvency practice, Mark Andrews. “This is not the first restructuring exercise in the Gulf, but it is the biggest. It will test the local business culture very severely. In procedural terms, it will be necessary to borrow from the restructuring experience of other financial centres. The INSOL principles will almost certainly be applied by the new CRO.”
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