Islamic financial restructuring is proving to be a contradiction in terms. A number of issuers of Islamic debt have recently gone into default and a new frontier of Islamic financial restructuring is emerging. But the very nature of Islamic finance is proving inimical to an orderly restructuring process as seen in the West.

Two companies in Kuwait - The Investment Dar and International Investment Group (IIG) - are in the process of trying to restructure their Islamic bonds - or sukuks - which went into default last year and this year, respectively. Last week the head of IIG made comments that his company was still a going concern and if it was not, it would have been in liquidation long ago.

Such comments matter. Under the basic tenets of Islamic finance, if a company is a going concern, then creditors have an obligation to work with the company to get it back on its feet, even if it is in default. There is no scenario that if a company misses one repayment then banks and bondholders can take control of a company and its assets. Rather they have to work with the company, share in some losses and help it back into a more positive state of health.

In reality, this means that the restructurings are drawn out, unclear and subject to the tenets of a religion which specifically bans the paying of interest. Indeed The Investment Dar has tried in the past to say that as its debts were not shariah complaint, it did not need to repay them.

In the region's biggest restructuring -  for state-controlled investment firm Dubai World and its subsidiaries - it seems that other more earthly concerns are driving process. In the deal that is on the table at the moment, those banks who are the main lenders to Dubai World are taking the pain in the form of reduced interest payments and extended tenors on the principal.

The bond holders - especially the Islamic bondholders - of its real estate subsidiary Nakheel are being made more or less whole. The reason? The government finds it easier to strong arm banks that have operations on the ground in the country, rather than bondholders. These tend to be based overseas and so would have no compunction in going to court in New York or London and causing an international stink.

Restructurings are always messy compromises. And there have never before been the kind of Islamic restructurings that are being attempted right now. Without the threat of enforcement, Islamic debt starts to look very like equity.