The government of Dubai announced a unilateral moratorium on the $59 billion debt mountain of its biggest corporate entity, Dubai World, a conglomerate that owns ports and real estate around the world, 26 November. The government says it has appointed DeLoitte LLP to advise it on restructuring Dubai World.

The news caused stock markets in Europe to decline sharply because of worries that Dubai’s massive investments in companies ranging from Porsche and Daimler to the London Stock Exchange may need to be liquidated. Banks were particularly hit. Rating agencies downgraded the debt of several Dubai government-run companies in response.

Dubai’s ruler, Mohammed Bin Rashid al-Maktoum, dropped several key aides involved in Dubai’s real estate boom 23 November, in order to assert closer control over a sprawling financial empire.

Links to other sites: Bloomberg, Reuters, Wall Street Journal