Arabtec Construction LLC, the largest subsidiary of Arabtec Holding has filed a bankruptcy petition with Dubai Court. Arabtec Construction, which is recognized as popular construction across Dubai has declared that they had gone bankrupt and had to file a bankruptcy application. It has been reported that a panel of seven experts is reviewing their application.
As per the statement that they made to Dubai Financial market, these experts will prepare a report explaining the holding company along with its subsidiaries including Austrian Arabian Readymix Concrete Company, Arabtec Construction, Arabtec Precast, and Emirates Falcon Electromechanical Company. It has been further explained that the panel will also be evaluating the company’s financial position and look if there exists any possibility of restructuring.
Arabtec, which has built world-famous structures from Louvre Abu Dhabi to Burj Khalifa, had reported a net loss of Dh 788 million (USD214.5 million) during the first half of last year as revenue for the period fell 28 percent to Dh 3.02 billion. It has been stated that two more companies including Gulf Steel Industries and GSI Steel Construction Contracting have also been added to the bankruptcy application.
The contractor had said that the company was planning to sell its two subsidiaries – Target Engineering and Arabtec Engineering Services (AES) to protect the value of its assets before liquidation. The company has appointed corporate advisory firm company Denovo to advise the potential sale target whereas Lumina Capital will look after the sales of AES.
Bankruptcy application begins with protective composition procedure (PCP) which will also allow agreement with creditors for seeking an alternative to bankruptcy in the UAE. So, if the court decides that the conditions for bankruptcy have been met, it can enforce suspension preventing individual creditors from taking further legal actions against the firm.
Construction companies across Dubai had faced huge trouble after the pandemic as the work slowed down drastically and the new projects were delayed or even canceled which ultimately lead to a liquidity crunch.