Nakheel’s offer to repay trade creditors threatens to leave some of those with the largest unpaid bills without a final settlement, according to sources close to the negotiations.

Sources say the deal with trade creditors is structured to give them no choice but accept the terms on offer, or risk not receiving the final 60 per cent of outstanding claims.

Under the terms of the deal, Nakheel will not issue a sukuk to creditors until more than 95 per cent of them by value have agreed to the proposal. The sukuk would act as a final repayment for 60 per cent of the outstanding balance due to the Dubai developer’s largest creditors.

However, a cash settlement equal to 40 per cent of creditors’ claims will be paid once 65 per cent of creditors by value have agreed to the deal. Creditors complain this deal threatens to leave them in limbo if the 95 per cent threshold is not reached.

“There is no alternative, what can we do. The creditors are large in number and not talking to each other,” says one trade creditor. Others complain that they feel they have no choice but to agree, especially considering that around 50 per cent of Nakheel’s trade creditors are owed less than AED500,000 ($136,124), meaning they will be repaid in cash and have no interest in the sukuk.

Nakheel says the 65 per cent approval level should be reached “very soon”, and that the cash payment will be made “regardless of whether the 95 per cent level is reached”. The company claimed that in late April it had already started to sign agreements with trade creditors and that there is no deadline for the 95 per cent threshold level to be reached.

Dubai-based Arabtec Construction, one of the largest contractors that are owed cash from Nakheel, says it has already accepted the offer.

If issued the sukuk will have a tenor of five years, meaning that it will potentially not be repaid until after the $20bn provided by Abu Dhabi and two Abu Dhabi-based banks. The sukuk will pay a 10 per cent interest rate. It is expected to be listed on the Nasdaq Dubai, giving holders of the sukuk the option of selling it and settling their positions, although there are concerns that the value of the sukuk may drop after it is issued.

The talks with trade creditors are part of a $9.5bn rescue plan for Nakheel that will involve the Dubai Financial Support Fund providing around $8bn of new cash to help settle claims and restart work on abandoned projects.

One source says that some contractors are already being contacted about restarting work on projects, with Nakheel offering a 45-day payment term.

Nakheel says the offer to trade creditors “is a very fair deal and the response so far has been positive.”