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Post-default sukuk restructuring: an appraisal of Shari'ah issues

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dc.contributor.authorAbu Umar Faruq Ahmad
dc.contributor.authorMohammad Omar Farooq
dc.contributor.authorRashedul Hasan
dc.contributor.authorAishath Muneeza
dc.date.accessioned2020-05-12T14:48:16Z
dc.date.available2020-05-12T14:48:16Z
dc.date.issued2019
dc.description.abstractSukuk 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.en_US
dc.identifier.citationAhmad, Abu Umar Faruq and Muneeza, Aishath and Farooq, Mohammad Omar and Hasan, Rashedul. (2019). Islamic corporate finance: capital structure. In Management of Islamic finance: principle, practice, and performance (pp. 113-128). London: Emerald Publishing Limited.en_US
dc.identifier.doihttps://doi.org/10.1108/S1569-376720180000019006
dc.identifier.issn1569-3767
dc.identifier.urihttps://ikr.inceif.edu.my/handle/INCEIF/3215
dc.languageEnglish
dc.language.isoenen_US
dc.publisherEmerald Publishing Limiteden_US
dc.rights2019. Emerald Publishing Limited
dc.sourceSEDONA
dc.subjectSukuken_US
dc.subjectSukuk restructuringen_US
dc.subjectShari'ahen_US
dc.subjectAsset-baseden_US
dc.subjectAsset-backeden_US
dc.subjectDefaulten_US
dc.subjectOwnershipen_US
dc.titlePost-default sukuk restructuring: an appraisal of Shari'ah issuesen_US
dc.typeChapter in Booken_US
dlc.maintopicIslamic capital markets
dlc.subtopicSukuk
dspace.entity.typePublication
ikr.doctypeScholarly Works
ikr.topic.maintopicIslamic capital marketsen_US
ikr.topic.subtopicSukuken_US
relation.isAuthorOfPublication81014255-5cb8-46bc-ad81-bf6d8a3a0702
relation.isAuthorOfPublication81014255-5cb8-46bc-ad81-bf6d8a3a0702
relation.isAuthorOfPublication81014255-5cb8-46bc-ad81-bf6d8a3a0702
relation.isAuthorOfPublication.latestForDiscovery81014255-5cb8-46bc-ad81-bf6d8a3a0702
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