After several months delay the Dubai developer is on the brink of agreeing its debt restructuring

Nakheel, the heavily indebted group behind the Palm Islands and World Islands in Dubai, is close to striking a deal with its creditors.

The developer needs to get approval from 95% of its creditors, which include contractors left with unpaid bills, to be allowed to restructure the terms of its US$10.5bn debt pile.

Nakheel was one of the companies that turned out to be struggling when Dubai had to be bailed out by neighbouring Abu Dhabi at the height of the financial crisis a year ago, with construction work already halted across the emirate.

Getting the approval has taken longer than anticipated, but Nakheel now has agreement from creditors that are owed 91% of the total. Although close to the threshold, that figure has only risen 1% since October as highly detailed negotiations continue with the bigger contractors.

The very smallest contractors are expected to be repaid in cash, but the remainder will receive a mix of both money and Islamic bonds.

Nakheel parent Dubai World had, at $24.9bn, the emirate’s most severe debt problems, but the repayment terms were restructured in September.