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02 October 2023

No company in liquidation even as sector slows down

Michael Grose (SUPPLIED)

By Staff Writer

No construction business has yet come through the door willing to put themselves into liquidation even as there is an upswing in restructuring advice, said a leading legal firm.

"There has been a marked increase in the number of contractors asking for help to obtain payment, including payments certified months ago on some of Dubai's largest projects," Michael Grose, a partner at legal firm Clyde & Co LLP, in the Middle East Projects and Construction Group, told Reuters.

Several Dubai-based contractors say they are owed millions of dirhams by state-linked developers and some may face bankruptcy as credit dries up and major projects are cancelled or scaled back.

Around $75 billion worth of projects in the UAE have been suspended or cancelled altogether according to an HSBC report issued in January. In response to a Reuters query, government-linked developer Emaar Properties , the largest listed Arab developer, said payments were based on a credit cycle and other conditions and that those that qualified would be paid.

"All payments that meet the criteria have been honoured and will continue to be honoured and will continue to be cleared, in line with contractual agreements," a spokesman said.

Government-owned Meraas said in statement sent to Reuters that payments and payment schedules in the company are an internal matter and therefore details are confidential between the company and its contractor.

One deputy chief executive with a consulting firm, who had a contract terminated by a major developer, said his firm was owed several million dirhams, now overdue, and did not know when he would be paid.

"Established developers or developers who have projects near completion will be in a better position than others (to make payments)," said Abeer Gouda, Senior financial analyst at Global Investment House in Kuwait. "It will depend on the developer's track record and the project itself, if it is near completion and on the location."