A special court in Dubai on Tuesday sanctioned the $ 2.2 billion debt-restructuring plan of Drydocks World after creditors approved the proposals.

"The sanctioning of the company voluntary arrangements concludes the formal approval of Drydocks World's debt restructuring proposals," Drydocks World, the shipbuilding arm of Dubai World, said in a statement following the hearing.

The ruling by the special tribunal said 97.8 per cent of Drydocks’s creditors agreed to the terms. A government decree allows the tribunal to enforce a restructuring proposal if at least two-thirds of the creditors agree to it.

The Middle East’s biggest shipyard turned to the Dubai World Tribunal in April to push through full consent for its restructuring. The tribunal is a special judicial body set up in 2009 to handle liquidation matters connected to Dubai World and its subsidiaries.

New York-based investment company Monarch Alternative Capital LP, which won a $ 45.5 million claim against Drydocks in a London court, did not vote on the proposal, while JP Morgan Securities abstained, Adrian Cohen, partner at Clifford Chance LLP, the law firm representing Drydocks, told the court on Tuesday.

Under the restructuring plan, Drydocks proposes to repay $ 2.2 billion of principal in full over five years. The proposed timeframe would be similar to the $ 25 billion restructuring deal reached by Dubai World with its creditors, which extended its debt repayments through new five and eight-year facilities with reduced margins.

Drydocks World is among several Dubai companies seeking to restructure debt in the wake of the global recession. Dubai World, one of the three main state-controlled holding companies, reached a deal in March 2011 with about 80 banks to delay payments on $ 25 billion of debt, while Dubai Group is seeking to restructure $ 6 billion of bank debt.

In 2008, the shipbuilding firm borrowed $ 2.2 billion to finance two acquisitions in Singapore to gain ships and Asian shipbuilding sites. The company borrowed $ 1.7 billion for three years at 170 basis points, or 1.7 percentage points, over the London interbank offered rate, or Libor. It borrowed another $ 500 million for five years at 190 basis points over Libor.

Bookrunners on the 15-lender syndicate were BNP Paribas, HSBC, Mashreq, Standard Chartered and Lloyds TSB Bank among others.

Drydocks World, which has built and repaired more than 2,000 vessels of various types and sizes, is considered the most prominent name in the maritime industry. It operates the Middle East’s largest shipyard in Dubai, where it builds and repairs ships and oil drilling rigs. It has yards operating in Singapore and in Graha, Pertama and Nanindah in Indonesia.

The Dubai-based shipping firm is expected to complete a joint venture agreement with Malaysia’s Kuok Group in third quarter. It sealed a joint venture deal in June with a company backed by Malaysian billionaire Robert Kuok that could see the Asian firm buy as much as 70 per cent of its southeast Asian business. The new group will be active in nine countries, own around 300 vessels and operate six shipyards. At present, Drydocks operates a fleet of 160 vessels comprising of tankers, bulk/cargo vessels, supply vessels, tugs, anchor handling tugs and barges.