United Arab Emirates

A large GMC 4x4 sits with deflated tyres. Like the Range Rovers and Camaro GT parked nearby, it is covered in a thick layer of sandy dust — one of more than 30 apparently abandoned cars lining the bays of a floor of a multistorey car park at Dubai airport. The vehicles are testament to the rising number of “skips” afflicting Dubai — indebted expatriates who have left the city state rather than face debtors’ prison as an economic downturn squeezes the business and finance hub, the Financial Times reported.

A Dubai-based firm has urged the Supreme Court to prevent it being sued here over its acquisition of a multi-million euro property in India from companies controlled by members of the family of businessman Sean Quinn, the Irish Times reported. Irish Bank Resolution Corporation alleges Mecon FZE is part of an alleged conspiracy by various Quinn family members and companies to place valuable assets beyond the bank’s reach.

Dubai-based property developer Limitless is set to complete a drawn-out debt restructuring after the final dissenting creditor sold its share of the company's 4.45 billion dirhams ($1.2 billion) debt, sources with knowledge of the matter said on Wednesday, Reuters reported. New York-based Stonehill Capital Management sold its debt in the state-controlled company, worth around $15 million at face value, to Dubai Islamic Bank, an existing creditor and one of the members of the creditor committee, the sources said.

An Abu Dhabi state fund said publicly for the first time on Monday that it hadn’t received billions of dollars in payments that a controversial Malaysian fund set up by Prime Minister Najib Razak claims it sent, The Wall Street Journal reported.

Al Jaber Group missed a March repayment on its $4.5 billion restructuring, three sources aware of the matter told Reuters on Tuesday, adding pressure on the Abu Dhabi-based conglomerate to quickly secure a new debt deal to save it from collapse. The family-owned group, best known as a contractor but with interests in a host of other sectors, has struggled after borrowing extensively at the end of the last decade to expand only to be caught out by a local economic slowdown.

Banks in the United Arab Emirates will suspend legal action against small and medium sized enterprises (SMEs) struggling to repay debt for up to three months to prevent a surge in defaults that may jeopardise the economy, Reuters reported. The initiative, which involves businesses working with lenders to restructure their loans, is intended to give breathing space to SMEs, which contribute around 60 percent of UAE's gross domestic product.

Banks facing a surge in defaults on small company loans are closing off credit to the sector in the United Arab Emirates, in a sign of the increasingly brittle business confidence in the Gulf amid a sustained slump in oil prices, the Financial Times reported. AbdulAziz al Ghurair, head of the UAE Banks Federation, estimated loans to small and medium-sized enterprises totalling between Dh5bn and Dh7bn ($1.36bn-$1.9bn) were at risk of default after the country’s national body that pools information on banks’ loan exposure revealed over-borrowing by SMEs.

A softening in the United Arab Emirates' economy has led to a surge in small and medium-sized businesses defaulting on debt, dragging on banks' performance and highlighting the need for a new bankruptcy law, Reuters reported. In a country where a bounced cheque risks landing the issuer in jail, there have been hundreds of recent cases of expatriate business owners fleeing the country, or "skipping", with unpaid debts, banking sources say. Others who remain have defaulted on debt and in some cases been arrested.

An impediment to private enterprise and a major risk for banks has been the lack of a viable insolvency law. Ironically, UAE, which is an important international financial and business hub, has functioned without effective insolvency laws, which hurt its international reputation, Gulf News reported in an analysis. Prior to the global financial crisis of 2008, business failures were dealt with in an ad hoc manner and conflicts, when they rose, were often resolved through informal arrangements, facilitated by external negotiators.

Fahad Al Raqbani, director general of Abu Dhabi Council for Economic Development, said that the long-awaited insolvency law in the United Arab Emirates is expected to contain provisions for corporate bankruptcy modeled on U.S. chapter 11 proceedings, The National reported yesterday. “Many companies in the US undergo Chapter 11 bankruptcy and then gain in momentum,” Raqbani said. “A given project may be successful, but also need restructuring.” The insolvency law was passed by the Cabinet in July.