Dubai property group Limitless seeks advisers for restructuring

Aerial view of the Sheikh Zayed Road, following the outbreak of coronavirus disease (COVID-19), in in Dubai, United Arab Emirates, March 26, 2020. (REUTERS)
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Updated 30 March 2020

Dubai property group Limitless seeks advisers for restructuring

  • S&P Global Ratings said the virus outbreak had exacerbated the supply-demand imbalance in Dubai’s real estate market, where the credit rating agency estimates real estate prices are “approaching levels seen at the bottom of the last cycle in 2010”

DUBAI: Dubai-based property developer Limitless told its creditors last week that it is looking to appoint legal and financial advisers to work on a financial restructuring plan, a company document seen by Reuters showed.
Limitless, along with Nakheel, was among the biggest casualties of Dubai’s property crash and subsequent debt crisis that began in 2009.
The company, formerly owned by state investment vehicle Dubai World, was one of a number of entities in Dubai that were forced to restructure their debts.
“Owing to the liquidity crisis, we are confirming that the company will be unable to pay accrued profit at the end of March 2020,” Limitless said in a letter dated March 23 and sent to Mashreqbank, which works as an agent for a group of the company’s creditors.
A Limitless spokeswoman said: “We have written to our creditors as a first step to finding a solution that will benefit all stakeholders.”
Limitless said in the letter a team from Dubai World was advising the company’s board of directors.
The letter said the company was committed to agreeing “on a restructuring plan for the benefits of the participants and other creditors.”
“To this end, we are in the final stages of engaging legal as well as financial advisers to assist us.”
In 2016, Limitless reached a second restructuring agreement with lenders to pay around $1.2 billion in bank debt in three installments in December 2016, 2017 and 2018, but has only repaid part of it, sources have said.

HIGHLIGHTS

● Limitless, along with Nakheel, was among the biggest casualties of Dubai’s property crash and subsequent debt crisis that began in 2009.

● The company, formerly owned by state investment vehicle Dubai World, was one of a number of entities in Dubai that were forced to restructure their debts.

Dubai — where property prices have been declining for most of the past decade — is bracing for a financial hit as the coronavirus crisis has impacted sectors vital to its economy, such as tourism and construction.
S&P Global Ratings said the virus outbreak had exacerbated the supply-demand imbalance in Dubai’s real estate market, where the credit rating agency estimates real estate prices are “approaching levels seen at the bottom of the last cycle in 2010.”

 


New emissions blow for VW as German court backs damages claims

Updated 26 May 2020

New emissions blow for VW as German court backs damages claims

  • Scandal has already cost firm more than €30 billion; ruling serves as template for about 60,000 cases

KARLSRUHE, Germany: Volkswagen must pay compensation to owners of vehicles with rigged diesel engines in Germany, a court ruled on Monday, dealing a fresh blow to the automaker almost 5 years after its emissions scandal erupted.

The ruling by Germany’s highest court for civil disputes, which will allow owners to return vehicles for a partial refund of the purchase price, serves as a template for about 60,000 lawsuits that are still pending with lower German courts.

Volkswagen admitted in September 2015 to cheating in emissions tests on diesel engines, a scandal which has already cost it more than €30 billion ($33 billion) in regulatory fines and vehicle refits, mostly in the US.

US authorities banned the affected cars after the cheat software was discovered, triggering claims for compensation.

But in Europe vehicles remained on the roads, leading Volkswagen to argue compensation claims there were without merit. European authorities instead forced the company to update its engine control software and fined it for fraud and administrative lapses.

Volkswagen said on Monday it would work urgently with motorists on an agreement that would see them hold on to the vehicles for a one-off compensation payment.

It did not give an estimate of how much the ruling by the German federal court, the Bundesgerichtshof (BGH), might cost it.

Volkswagen shares were 0.5 percent lower. The BGH’s presiding judge had signaled earlier this month he saw grounds for compensation.

Costs mount

“The verdict by the BGH draws a final line. It creates clarity on the BGH’s views on the underlying questions in the diesel proceedings for most of the 60,000 cases still pending,” Volkswagen said.

A lower court in the city of Koblenz had previously ruled the owner of a VW Sharan minivan had suffered pre-meditated damage, entitling him to reimbursement minus a discount for the mileage the motorist had already
benefited from.

The court at the time said he should be awarded €25,600 for the used-car purchase he made for €31,500 in 2014.

“We have in principle confirmed the verdict from the Koblenz upper regional court,” said BGH presiding federal judge Stephan Seiters.

Volkswagen had petitioned for the ruling to be quashed altogether by the higher court, while the plaintiff had appealed to have the deduction removed.

A Volkswagen spokesman said that outside Germany, more than 100,000 claims for damages were still pending, of which 90,000 cases were in Britain.

The carmaker also said it had paid out a total of €750 million to more than 200,000 separate claimants in Germany who had opted against individual claims and instead joined a class action lawsuit brought by a German consumer group.

The carmaker said last month it would set aside a total of 830 million for that deal.

In a separate court, Volkswagen agreed last week to pay €9 million to end proceedings against its chairman and chief executive, who were accused of withholding market-moving information before the emissions scandal came to light.