Struggling Dubai developer failed to convince creditors to agree to a restructured debt deal in time for the new year

Stricken Dubai developer Nakheel has missed its December deadline to secure enough agreement from creditors to restructure and begin paying off its $10.5bn debt mountain.

The firm, which has struggled to repay creditors since the Dubai property crash, said it had secured the agreement of 91%
of creditors by value, 4% short of its target.

Nakheel, the company behind the Palm Islands project in Dubai, owes UK consultants and engineers an estimated £250m. These companies include Halcrow, Atkins, EC Harris, Hyder, Mouchel and WSP.

In October Nakheel chief executive Chris O’Donnell said he thought 95% of creditors would agree to the new deal by December, after which the developer would issue sukuks, a type of Islamic bond.

At the time he said 85-90% of the company’s creditors had already agreed to the plan.

On 29 December Nakheel said it had not hit the 95% target.

“Ninety-one percent by value of trade creditor accounts payable has been finalized in signed restructuring undertakings,” the firm stated.
“We continue to work to achieve the required 95% restructuring threshold.”

In April 2010, Nakheel revealed plans to restructure its debt and pay creditors 40% of the money owed in cash and the remaining 60% in sukuks.

The sukuk bonds, which are redeemable in five years, pay a return of 10% a year.

However, Nelson Ogunshakin, chief executive of the Association for Consultancy and Engineering, advised creditors it would be prudent to write off the sukuks.

He said questions remained over whether the sukuks would be redeemed when they mature in five years’ time.