Burj Khalifa construction company files for bankruptcy
Mounting debts have left the once-prestigious building company struggling to pay back loans, sub-contractors and some employee salaries.
The bankruptcy filing applies to Arabtec Holding and four of its subsidiaries - Arabtec Construction llc; Austrian Arabian Readymix Concrete Co.; Arabtec Precast; and Emirates Falcon Electromechanical Co..
According to sources who spoke to Gulf News, UAE government ministries are monitoring payments, to ensure the Arabtec is held accountable.
The Dubai court has appointed experts, who will examine the bankruptcy and prepare a report for each of the subsidiary companies and evaluate their “financial position and whether it’s considered indebted, and the possibility of restructuring,” according to Arabtec.
The construction firm’s financial problems were further compounded by the onset of the coronavirus pandemic.
“Arabtec’s total liabilities at the end of June last was about $2.75 billion (Dh 10.14 billion), which included almost $500 million in bank borrowing,” Vijay Valecha, Chief Investment Officer at Century Financial told Gulf News.
“The move to liquidate followed a first-half 2020 loss of $216.18 million and total accumulated losses of nearly $400 million,” he added.
The collapse of the company has been blamed on its alleged overambition.
“It created too many subsidiaries, went into too many new markets at the same time, took on too many projects in its home market at the same time,” a source told Gulf News.
“Some of its pricing on projects were awry too – the pricing now is no way similar to what was there five years ago. But Arabtec was slow to react in many ways,” the source added.
Under UAE bankruptcy law, Arabtec will now have 12 months to try all possible avenues to save the business.