Dubai: Bank of Tokyo-Mitsubishi Joins Creditors Committee

Reuters reports that BOTM is joining the Creditors' Committee and this is being cited as a reason for the delay in submission of the standstill request by Dubai World.

Frankly, I have to admit I don't understand this.  Dubai World's standstill request should be predicated on facts.  Its estimated cashflow should drive the terms.  And it should not expect to deliver the request and have the banks meekly accept it.  They will have questions.

Unless an abundance of bankerly politeness is required, I don't see why DW can't submit its proposal and then BOTM and any other bank who joins the Committee can catch up.   As well, I presume that the Creditors' Commitee is going to go to all the creditors for their agreement.  Unless of course DW is going to the Insolvency Court at the DIFC to get a standstill.  If that is the case, then from a purely legal standpoint it need only convince the Court to grant the standstill.  Under the Insolvency Law, creditors get to vote on the proposed restructuring plan not the standstill.  Not that I'd recommend doing that.

Time is of the essence, as the lawyers say.  Dubai can't afford to lose a day. Particularly because of the artificial end of April deadline.  A deadline that bites both the banks and Dubai - as Abu Dhabi's charity is conditioned upon that deadline.  And if my guess is correct, bites Dubai a bit harder than the banks.

What was also another strange note was this comment:  "What this (Mitsubishi's addition) implies is that the negotiation process will be prolonged and we may see some more banks enter the scene," said Janany Vamadeva, banking analyst at HC Brokerage, predicting an agreement to extend maturities with interest paid out.

Perhaps, Mr. Vamadeva has a different definition of "prolonged" than I do.  But it seems a bit optimistic to expect a diverse group of creditors with differing financing instruments to agree on a US$26 billion restructuring quickly.  Bankers usually save all the caution they failed to exercise in the loan underwriting stage for the loan restructuring stage.  

It's AA's law of the conservation of due diligence.  If you don't do it at the beginning, you wind up doing it at the end.  And then usually compounded several times with manifold layers of silliness  and needless complexity added in by some of the creditors.