Creditors of Dubai World are expected to reject a standstill agreement proposed by the company, threatening to drag out negotiations over $26bn (£15bn) worth of the conglomerate's debt.

Advisers involved in the talks tonight said that the process could take months as more than 100 accountants, lawyers, bankers and other professionals descended on Dubai from London. "There won't be a standstill agreement," one said.

By rejecting the company's proposal to put interest payments on hold, creditors automatically trigger a default, leading to inevitable further wrangling.

Global markets have begun to recover following initial fears that the Dubai crisis would spread but the local battle over who bears the losses has only just begun. If the standstill is rejected and a default is triggered, all parties would have to compromise to reach a restructuring agreement, sources said.

Creditors – including UK banks such as RBS and Standard Chartered, as well as hedge funds – may be in a weaker position than they would be in the UK, which has a more creditor-friendly legal environment. Suing Dubai World, in Dubai, over Dubai-based assets "would be legally very expensive and would go very slowly", one of the sources said.

The Dubai government, which has said it will not cover Dubai World's debts, "might find itself being the last piece of the jigsaw to make a deal work," another source said. But creditors are not taking any government help for granted. "Creditors hoping that if they shout loud the state would give in to them have now been given enough evidence that this won't happen," another source said.

Creditors are also unlikely to present a united front – some might want to swap some debt for assets, holding on to them in the hope that the market will recover, while others will want cash.

The crisis has attracted distressed debt investors, who usually buy debt at a significant discount with the view that a restructuring will increase the value of their debt, or that they could seize some assets. Distressed debt players, typically aggressive and used to legal threats and action, may push the company into a better deal for creditors – although too much pressure can make a deal fall apart.

The restructuring is affecting other government related entities (GREs), also seen to have less support from the government than investors thought. Ratings agency Standard & Poor's downgraded six Dubai GREs as it "revised its expectation for the likelihood of extraordinary support from the Dubai government to 'low'". The six are DIFC Investments (which owns the Art Dubai show), ports operator DP World, Jebel Ali Free Zone (where 6,100 companies conduct business), commodities market Dubai Multi Commodities Centre Authority, Dubai Holding Commercial Operations Group (an investment company), and property developer Emaar Properties.