Islamic finance has not been immune from the woes faced by the broader financial markets. On the contrary, for the first time since Islamic finance has matured into a global phenomenon, it has confronted issues of default, insolvency and restructuring on a significant scale and, in some cases, on the global stage. The need of Dubai World, Kuwait’s The Investment Dar, and other Gulf based investment and real estate development firms, to restructure billions of dollars in financing has made headlines around the world. Shariah-compliant investments made in Western nations have also required restructuring, alongside their conventional counterparts, due to the economic downturn in these nations. These defaults have precipitated efforts on the part of borrowers and creditors to restructure financial liabilities, both in and out of bankruptcy.
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Reprinted with permission from Financier Worldwide Magazine.