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December 31, 2009

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Dubai acts to protect creditors

DUBAI'S ruler has set up a panel to protect creditors of troubled mortgage lenders Amlak and Tamweel, whose long-planned merger is due to take place early next year.

Shares in the two Dubai-based Islamic firms were suspended last year and have not traded since. In November 2008, the United Arab Emirates federal government announced it would merge them.

Last month, Tamweel's Chairman Sheikh Khalad bin Zayed al-Nahyan said the merger would take place in the first quarter of 2010.

Dubai's ruler yesterday ordered the creation of a judicial committee that will guarantee protection to creditors and companies related to the lenders, a statement from Sheikh Mohammed bin Rashid Al Maktoum's office said.

The committee "will be the only judicial body ... with the right to review all requests and legal claims related to settling the financial issues of the two companies," the statement said. It gave no more details about the panel.

A state panel led by the federal economy minister had been reviewing the merger plans. In October, the minister said the panel was recommending merging the two lenders into a single, Islamic bank early next year.

Yesterday's announcement is the latest step in the government's bid to protect creditors' rights, amid rising criticism about the emirate's legal structure.

Dubai shocked the world on November 25 when one of its largest conglomerates, Dubai World, said it would seek a standstill on US$26 billion in debt.


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