Dubai: The UAE retail and leisure company, Marka, has been declared bankrupt by a local court and all of its its assets brought into liquidation. The court order applies to all the Marka subsidiaries as well, and also requires board members to pay up Dh448 million to creditors.
According to a ruling by a Dubai court, the company’s managers and directors were stripped of all rights to manage the company or its subsidiaries. This followed a case brought against Marka, which had at its peak gone through a hugely successful IPO and listed on DFM, by creditors.
They cannot manage or dispose of the company’s funds, pay out any claims or borrow any sums under its name. In addition, they will have to hand over to the court-appointed bankruptcy trustee all funds and documents of the company within five days of the date of the ruling.
This provision applies in cases where the company’s funds are not sufficient to fulfil at least 20% of its debt exposure.
Ceased to function
Marka had for all intents and purposes ceased functioning since 2019 after running into severe cashflow problems and shareholders were called in to vote for liquidation.
At the time of its formation in 2014, Marka had all the aura of being a star in the UAE’s retail sector. While most retailers were family-owned enterprises, Marka went in for a high-profile IPO, which was an instant success at the time of its float in the second-half of 2014. The offering was heavily oversubscribed, pulling in $2.7 billion for what was a $75 million float. At the time it was the first IPO in Dubai since 2009.
On the first day of listing the stock had shot up 59 per cent. The company was to be a holding enterprise for a range of global fashion and accessory brands, as well as F&B concepts. After the IPO and flush with funds, it went on a buying spree, acquiring local and regional brands.
Alliances were created with major sporting brands, including premier football clubs of the world. Sports memorabilia and merchandise would be sold at branded concept stores occupying prime spaces in leading UAE malls.
During this phase, it seemed nothing could come in the way of Marka’s future growth. But then the quarterly results started coming in, and that’s when investors realised they had to be patient about their returns.
But if investors were willing to see the big picture early on, the subsequent results sucked up all of the remaining optimism that the company was on to bigger things. According to Vijay Valecha, Chief Investment Officer at Century Financial, “Marka’s shares have been suspended since May 2018. The last available financial statements are for 2018.
“And now, the company is getting wound down.”