Dubai World, an investment company that manages and supervises a portfolio of businesses and projects for the government of Dubai, is asking for a delay on paying back billions of dollars in debt.
The request has sent global stock, commodity and currency markets into a tailspin.
Meanwhile, Dubai is already $80bn in debt and the cost of insuring the emirate - one of seven sheikhdoms forming the United Arab Emirates - against default on its loans has gone up again.
It will now cost $670,000 to insure $10 million in Dubai debt for a period of five years.
Al Jazeera's Aaron Chew looks at what's at stake.
Source: Al Jazeera