Dubai-based property lender Amlak Finance is in talks with creditors to restructure debts of around 7 billion dirhams ($1.9 billion), in the latest attempt to resurrect a victim of Dubai's property crash.

The sharia-compliant mortgage lender is negotiating with a creditor committee of six members, which includes two government-owned funds as well as Dubai's largest lender and its biggest Islamic bank, two sources with knowledge of the matter said. They spoke on condition of anonymity as the information is not public.

Amlak has not traded since November 2008, when its shares were suspended along with rival Tamweel, as credit markets dried up and Dubai real estate prices began a slump which would see them fall more than 50 per cent from their peak.

Dubai has been forced to work through a number of corporate debt issues already, restructuring debt at the likes of Dubai Holding Commercial Operations Group and Dubai International Capital.

Helped by an economic revival in trade and tourism over the past year and its status as a safe haven in the politically turbulent Middle East, real estate prices have shown signs of recovery and new projects are being announced.

"Amlak Finance and its financiers are still in progress through the joint committee created for this purpose," Amlak said in a statement to the Dubai bourse on Tuesday, without providing any further detail.

Tamweel, which at one stage was rumoured to be merging with Amlak as a solution to both companies' problems, was revived in November 2010, when Dubai Islamic Bank (DIB) took control in a deal arranged by the Dubai authorities.

DIB said earlier this month it would offer to buy out the remaining stock of Tamweel through a share swap.

The Dubai government is in a difficult position because it wants to avoid pushing equity holders into significant pain, but at the same time it is owed cash directly through the funds and indirectly through the banks in which they own a big stake, one of the sources said.

Emaar Properties, itself 31-per cent owned by government fund Investment Corporation of Dubai (ICD), controls 45 per cent of Amlak, with the rest owned by the public.

The creditor committee consists of Emirates NBD, which has the largest exposure, Abu Dhabi Islamic Bank, DIB, Standard Chartered, the Dubai Financial Support Fund (DFSF) and National Bonds, the two sources said.

PricewaterhouseCoopers is advising the creditor committee, while KPMG is advising Amlak.

A source at Adib confirmed it was on the committee but wouldn't comment further. Both ENBD and Standard Chartered declined to comment, while the Dubai government media office and DIB weren't immediately available for comment. – Reuters