Reuters quoted Dubai based contractors as saying that they are owed millions of dirhams by state linked developers and some may face bankruptcy as credit dries up and major projects are cancelled or scaled back in the emirate.
Mr Michael Grose, a partner at legal firm Clyde & Company LLP, said that “There has been a marked increase in the number of contractors asking for help to obtain payment, including payments certified months ago on some of Dubai"s largest projects.”
He added that “While there is definitely an upswing in restructuring advice, no construction businesses are coming through the door to put themselves into liquidation.”
A Dubai based contractor said that “We have had to let go half of our staff and cut wages and it is not because we have no work, it is because we are not being paid for the work that we have completed.”
Emaar Properties said that payments were based on a credit cycle and other conditions and that those that qualified would be paid. A spokesman of Emaar said that “All payments that meet the criteria have been honored and will continue to be honored and will continue to be cleared, in line with contractual agreements.”
Meraas also said in statement that payments and payment schedules in the company are an internal matter and therefore details are confidential between the company and its contractors.
As the global financial crisis began to hit the seaside emirate late in 2008, major government linked developers behind some of Dubai"s high profile projects have put work on hold and cut jobs. Around USD 75 billion worth of projects in the United Arab Emirates have been suspended or cancelled altogether according to an HSBC report.