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Microfinance has continued to receive positive consideration as a powerful and prospective tool needed in combating poverty and promoting financial inclusion among the poor and lower-income groups. It refers to the provision of financial services to poor and low-income people whose low economic standing excludes them from formal financial systems (IRTI, 2007). Microfinance institutions (MFIs) do enable the poor to gain access to financial services such as micro-credit, venture capital, micro-savings, micro-insurance, and money transfers on a micro level which enhances the involvement of those considered unbankable but with the acute need of financial assistance. Extending financial services to the poor not only enhances their household income and economic security, but also enables them to acquire assets and decrease their vulnerability thereby accelerating the demand for other goods and services in terms of health and education, thus leading to socio-economic development.

Sukuk restructuring primarily aims at offering a debtor more latitude, in form and time, to settle his obligations. To meet Shari'ah requirements of transferring assets to Sukuk holders in asset-based Sukuk, the originator usually transfers the beneficial ownership to the issuer special purpose vehicles (SPV). However, in asset-backed Sukuk, the originator sells the underlying asset to an SPV and Sukuk holders do not have recourse to the originator in the event of defaults. Among some key unresolved Shari'ah issues in this regard is whether a change of contract necessitates entering a new contract. Other related issues that conflict with the tenets of Shari'ah are: (1) Sukuk structuring on tangible assets and debts; (2) receiving the full title by the Sukuk holders to the underlying assets in the event of default in case of securities that are publicized as asset backed; (3) Sukuk's similarity with interest bearing conventional bonds: (a) capital guarantee by the originator or third party, (b) the originators, promise to repurchase Sukuk at face value upon their redemption, and (c) providing internal and external credit enhancement. The Shari'ah-compliance of the above-mentioned clauses and structures of Sukuk remain debated among the Shari'ah scholars. Based on some specific cases, this study examines the Shari'ah viewpoint on sukuk restructuring and potential solutions to these unresolved Shari'ah issues in light of the past and recent declaration of some Sukuk defaults as non-Shari'ah complaints. Undoubtedly, resolution of these and other unresolved issues pertaining to Sukuk defaults can help strengthen the confidence of investors in Islamic capital market structures.