DUBAI COURT APPROVED BANKRUPTCY OF ARABTEC HOLDING AND ITS SIX SUBSIDIARIES

Last week, a trial that opened bankruptcy cases for Arabtec Holding and six of its subsidiaries (including Arabtec Construction, Arabtec Precast, EFECO and others) took place in Dubai. Each of the legal entities now has its own interim manage, whose tasks include publishing bankruptcy decisions, checking debt obligations, maintaining a register of creditors and carrying out all the necessary procedures. This must be done within 35 days, as stated in the documents of the stock exchange.

For the period of bankruptcy, all judicial and enforcement proceedings against companies that are part of the largest construction holding in the Arab Emirates, will be temporarily suspended until the approval of the company's restructuring plan or until ten months since the current court decision have elapsed. The next meeting is to be held on July 26th.

The possible bankruptcy of the Dubai construction company became known back in December last year, when the decision of the general meeting of shareholders, adopted on September 30 after two months of consultations with all interested parties, was announced. At a meeting of the company's board, the participants came to the conclusion that it would be inappropriate to continue working without starting the bankruptcy process.

Arabtec blames the real estate market, which has declined markedly in recent years, for its financial problems. In early 2020, the company announced losses for the first time since 2016. Previously, the company participated in the construction of the Louvre Abu Dhabi (an art museum on Saadiyat Island, opened in 2017, worth an estimated € 600 million). In 2018, the company won contracts for the construction of public halls on the outskirts of Dubai for the Dubai Expo site. The contractor, who built the Burj Khalifa, chose the company from many other bidders.

However, compared to AED 256.3 million in profit in 2018, the company incurred a net loss of AED 774.5 million (about $ 210 million) the following year.

Experts cited low liquidity in the real estate sector, as well as a slowdown in the real estate market, where several new construction projects were launched. As reported in stock exchange reports, the company's revenue by this time fell by 21% (to 7.78 billion dirham), and the chief financial officer of the holding, Adel Al-Vahedi, has resigned.