By Staff writer
Indebted Palm developer previously said contractors “always exaggerate” claims, which also "exceed reasonable amounts"
Nakheel has negotiated to reduce the amount it will pay out in trade creditor claims by around 85 percent, a spokesperson from the government-owned Dubai developer told Arabian Business.
The firm, which overstretched itself building islands in the shape of palms and other ambitious projects, said negotiations had seen the value of trade debts fall by more than three quarters.
“Nakheel is professionally and amicably settling claims made by trade creditors, many of which exceed reasonable amounts. In doing this, we have engaged external independent claims consultants and external legal advisors to ensure that settlements are reasonable to both parties,” a spokesperson told Arabian Business.
“Up to now, the settlements on claims have averaged around 15 percent of the original claims made by contractors. We expect similar settlement figures for the remaining claims.
“Nakheel, by engaging external advisors, has undertaken the most transparent and fair approach to settlement of trade creditor claims in the market. Nakheel’s approach favours amicable settlement. Parties who are not able to reach amicable settlement with Nakheel retain the option of their contractual right to pursue arbitration,” the statement added.
Nakheel chairman Ali Rashid Lootah last year said contractors “always exaggerate” their claims and negotiations were a standard part of the industry.
“People claim one million and at the end of day, after you analyse the claim and renegotiate… [and you agree an amount],” he said.
Speaking to Gulf Business magazine this week, Lootah said the firm had settled AED3bn (US$817m) out of a total claim of AED8bn from creditors. He added that he expects to lower the value of the remaining invoices to approximately AED1bn.
"The remaining big boys, they put the big figures, but we're confident it will be about the same [reduction]," Lootah said. "We expect to bring it down to not exceeding AED1bn total. We're patient. I'm not in a hurry to pay - if they want to settle, they have to be reasonable."
Nakheel, whose extravagant developments at the height of Dubai's property boom contributed to the emirate's debt woes, has been slowly recovering from the crippling real estate collapse.
Earlier this month, the state-owned developer said its first-half profits jumped 36 percent, buoyed by property handovers on several projects.
The developer reported net profit was AED767m (US$208.82m) in the first six months of the year, up from AED562m in the year-ago period.
Revenues rose to AED3.1bn in the first half, up 112 percent from the corresponding period a year ago, it said in a statement.
It said in August 2011 it was restructuring some AED59bn of liabilities, including AED32bn to Dubai government, AED19bn to trade creditors and AED8bn to banks.
As part of the restructuring, the company, which was previously the property arm of Dubai World, is now controlled by the Dubai government, along with another debt-ridden property firm Limitless.
Wow...how nice of Nakheel and it's board. Time shall tell you guys, time shall tell.
Why do this firm's PR consultants keep allowing it to dig an ever deeper hole, thereby damaging Dubai irreparably and bringing opprobrium on the remaining staff at Nakheel? It is text book taking the money before running.
ISSUE COMPLETION CERTIFICATES FOR GOLDEN MILE, MR LOOTAH!!!! ITS 100% PAID UP!!!
SUE IFA FOR THE RETAIL DISPUTE. SEAL OFF THE RETAIL SPACE. WHY ARE YOU TORTURING & PUNISHING DUBAI'S INVESTORS BY SEALING OUR HOMES?
YOUR ACTIONS ARE ILLEGAL IN ANY OTHER LAWFUL CITY IN THE WORLD. WE CAN'T EVEN APPROACH DWT TRIBUNAL WITHOUT COUGHING UP $200,000!!!!!
Way to go Nakheel
"I am not in a hurry to pay, they settle."
Rather the same can be said of their projects: Not in a hurry to deliver, they settle.
On an on the sorry Nakheel story goes.
It could have been nice if Nakheel and its Chairman for once address the individual investors who lost millions in Nakheel projects such as Dubai Waterfront. It seems that everyone is sleeping and nobody cares about these investors who invested their savings in these projects where Nakheel is the master developer. At least they could come forward and cancel Waterfront project giving a slim chance to investors to get some of their investments back or take the developers to court.
When Nakheel say 'claims' what they really mean is amounts owed for work with was completed by contractors under business contracts which Nakheel happily signed at the time of tendering the work. Fact is at the time of tender Nakheel would not have agreed to the payment for these works if it had not been reasonable under the economic climate at the time as there are always several tenders for a job and one would expect nakheel went with the best value option at the time....so i dont see how they can claim that the amounts owed were overvalued when clearly these works were agreed on by tender and then actual business agreements signed by Nakheel. Nakheel are forcing companies to accept something rather than nothing, this in not negociating reducing amounts owed, for many companies this is desperation to get something owed rather than nothing and that is why they agree to accept such insanely low offers for the work they have done building Nakheels iconic projects..
I would love to see this logic (and precedent) used by a personal banking customer to challenge and win settlements on outstanding "claims" for financial products supplied by local banks.
Or is this one rule for one and one rule for another...
They should give Chairman Ali the job of sorting out the European Debt Crisis, he can reduce Soveriegn Debt by 85%. He's a genius, it was so simple, you just don't pay. Why didn't we all think of that.
I'm afraid someone in the world is thinking the same thing. "I have time, soon or later, I'll get you".
How cruel when babies are being brought up without fathers who are behind bars and you have time !!! Yours is the biggest bounced cheque Duabai has ever seen. but it will bounce back rest assured !