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Dubai court to give verdict on Engineering Firm - Drake & Scull's restructure plan.
The Dubai-based engineering firm Drake & Scull International expects to see a 90 per cent write-off on its debts as a part of a restructuring plan that needs to be approved by a local court. The money owed to the government and those related to labour rights will be paid in full to ‘reach a debt amount equal to zero’ as part of the plan.
Everything vests with what the court in Dubai will decide. Once the proceedings of the court are completed, the rest of the procedures agreed upon in the plan will be initiated, including raising the company’s capital and submitting a request to return the company’s stocks to trade in the Dubai Financial Market. The company had spent two years putting together the restructuring plan, including extended negotiations with creditors and lenders. Though the projects are ongoing, there is a constant shadow of accumulated losses of more than AED 4 billion.
The Dubai Court had adjourned a hearing on the matter earlier. It has requested the Public Prosecution’s opinion on an expert’s report that looked into the Drake & Scull saga. In 2018, the company’s then management revealed that legacy losses were far higher than what was showing on the books and that this could be in the region of AED 4 billion.
It was in April 2022, that the Dubai Court of Appeal ordered the appointment of an external accounting expert to evaluate the company’s financial position and to clarify the reasons that led to the stopping of debt payments. The report was submitted, which confirmed the ability of the companies to implement the restructuring plan.
According to the construction industry sources, a 90 per cent write-off may be unprecedented, but Drake & Scull could provide the proof required that it could remain a going concern without the debt overhang, it can be considered. If most creditors and lenders are bought into the company's plan, that is extra credibility. Thus, the upcoming verdict will be quite influential for future cases too.
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