White Bay investors face deadline

The deadline for investors involved in the first bancruptcy case of a UAE developer is looming this Friday.

Investors in the failed White Bay resort in Umm al Qaiwain are facing a Friday deadline for filing claims in the first bankruptcy case involving a UAE developer.

The legal and development communities are following the case, which could set guidelines for future developer bankruptcies.

"The main area of interest will be to see how efficiently and effectively the court and court-appointed liquidator deal with … the claims of the secured and unsecured creditors," said Jody Waugh, a partner at the Dubai office of the law firm Al Tamimi & Company.

Liquidators are overseeing the break-up of Al Murjan Real Estate, which was developing the US$3 billion (Dh11.01bn) project. White Bay was planned to cover 1.76 million square metres on two islands and include 8,000 homes, shopping centres and a marina.

Investors have been told there are enough assets to cover all claims, but many remain sceptical.

"I don't have any expectations," said Tobias Krohn, a German telecommunications executive who paid about €40,000 (Dh195,764) for an apartment. "I think most of the money is lost."

Suhaib Shaikh, a member of the liquidation committee, confirmed yesterday that liquidators believe Al Murjan will be able to repay claims. But he declined to provide further details or say how many claims had been filed.

"The mechanism for covering claims is not declared at the moment," Mr Shaikh said. "Whatever the mechanism, there is full transparency in the process."

Al Murjan filed for liquidation in November. The company is owned by Sheikh Abdullah bin Rashid, Deputy Ruler of Umm al Qaiwain, and Al Khalijia Investments, a Sharjah company, according to statements from the liquidators.

Sheikh Abdullah filed a suit to force the proceedings, citing the inability to obtain planning approvals from the local Government, according to a notice from the liquidators.

In addition, 50 per cent of the buyers defaulted on their payments, the liquidators said.

Buyers typically paid about Dh1m in deposits to buy property in White Bay, said Ludmila Yamalova, a managing partner at HPL Yamalova & Plewka, which has been working with 15 investors in the project.

There is still little specific information available about the assets of the company, Ms Yamalova said. "What we're trying to do is get a copy of the original filing and we have yet to get that."

In a meeting with the liquidators last month, she was told Al Murjan owned the land outright, without financing. That might make it easier to recover funds, Ms Yamalova said.

While it is still early, she said there was "definitely promise" being shown in the process so far. But it is still unclear whether there are secured creditors who might receive preferential treatment over investors.

"It seems the law is there and it is being enforced and it gives investors the promise of finality," Ms Yamalova said. "At least it provides some sort of transparency and some sort of validation of what is going on."

But Valeriy Babak, an investor, is not so sure. He paid about Dh2m for two villas, and planned to live in one and give the other to his daughter.

"It was my dream to have a villa on the seaside," he said.