Dubai: Al Murjan Real Estate LLC, the company behind a $3 billion (Dh11.01 billion) stalled project in Umm Al Quwain is undergoing liquidation, a person close to the process told Gulf News. "With reference to the White Bay Project in Umm Al Quwain, please be advised Al Murjan Real Estate LLC is now under liquidation," the company's website says.
Shaikh Abdullah Bin Rashid Al Mualla and Al Khaleejia Investments LLC formed Al Murjan Real Estate during the boom time in the country's property sector to create opportunities from the boom. However, the financial crisis in 2008 severly impacted the sector, forcing many developers to either slow down works or stop work on certain projects.
"More than half of the investors failed to meet their financial obligations, that caused the decision," the source told Gulf News.
Shaikh Abdullah Bin Rashid Al Mualla has launched a lawsuit against the company asking to liquidate the company and appoint court liquidators for the company to complete the process, and this was upheld by the Sharjah Federal Court of First Instance.
In its liquidation filing, the company said, "The company started its activity and faced difficulties in the execution as the Department of Planning and Survey in Umm Al Quwain has, without any justification, rejected to approve activation of the guarantee account; approve to divide the project's land; refused to sort and divide the project's land according to the main plan which was submitted by the company and formally approved by the department."
Payments overdue
This also comes at a time when nearly 50 per cent of the buyers failed to pay the amounts due on them, which it said "has affected the company's capability to obtain finance from banks despite the company, in light of the global economic crisis, has got the approval of the Mashreq Islamic Bank to finance the buyers. Also, the company's management succeeded in obtaining financing from the main contractor to complete the project in return for a mortgage on unsold land to ensure the payment."
Ala Al Khazaie and Ahmad El Ghandour were appointed court liquidators for the company.
‘The buyers will be notified within 45 days of the date of the meeting for the creditors of the company, to register their names, the due debt and the supporting documents of that debt and currently the assets and liabilities of the company are being defined by the liquidators in order to present to the liquidators," the company said.
The liquidators will submit a plan or plans to settle these debts after confirming that they are correct.
Lawyers say the move is the UAE's first court-mandated liquidation of a distressed property project since the financial troubles struck.
Customers at the 8,000-home White Bay development in Umm Al Quwain now face the prospect of a long legal process to recover down-payments as they scramble for assets along with other creditors, potentially undermining investor sentiment further.
— with inputs from Financial Times
