My husband and brother started a business in Dubai four years ago, which has been facing a number of problems for the last two years. To finance the business, which offers fabrication services, we sold all of our assets back in India, took out several loans and ran up debts on credit cards. In total we have borrowed over Dh1 million for the company, where I also work. We owe a lot to the suppliers and workers as well as several banks. We are not even able to finance our children’s education. Suppliers, workers and banks are calling every day and have lodged cases against us for non-payment. My husband even stayed in jail for almost a week. My husband and brother are really hard-working people; they worked hard to start this business and are now doing the same to keep it going. Right now, we are facing a lot of problems mainly because of lack of funds. The debts are all in my husband’s name and we started missing payments four months ago. The debts are:
Loans: (outstanding / monthly payment)
Bank 1: Dh135,000/ Dh7,381
Bank 2: Dh137,000/ Dh8,733
Bank 3: Dh150,000/ Dh7,875
Bank 4: Dh110,000/ Dh4,655
To suppliers: Dh400,000
Credit cards:
Bank 1: Dh75,000
Bank 2: Dh42,000
Bank 3: Dh50,000
Bank 4: Dh30,000
Bank 5: Dh39,000
Total debt: Dh1,168,000
We are owed Dh500,000 by a client. We have been waiting for 11 months to receive this payment. If we could recruit to get to a personnel strength of 30 employees, we could recover very fast. At the end of the month we are expecting a project worth Dh1m. We spend about Dh9,000 a month on our own monthly expenses and have two children to support. Can you help us resolve this? JM, Dubai
Debt panellist 1: Shaker Zainal, head of retail banking at CBI bank
You haven’t mentioned the amount of revenue your business currently makes. Your monthly instalment payments are around Dh40,000. In addition, you need Dh9,000 to cover your living expenses, so I am assuming that your company nets you less than Dh50,000 a month, which is why you are missing regular payments.
As you have loans and cards spread across many banks where most payments are in default, the first thing to do is to speak to all of them, assure them that a solution is being sought and request some time until you find a solution. Every bank has its own process of recovery and you should anticipate that at some stage, they might initiate legal proceedings, which would cause you more difficulties.
It seems most of the loans were for working capital needs. As the business has been running for four years, you have the option of reaching out to banks, who provide working capital loans to SMEs. You could then request that all your debts are consolidated at one bank (with or without collaterals) and they may provide you with working capital financing to expand/enhance your business and help get you out of the debt spiral. Also have your business reviewed by a chartered accountant, who provides proper budgeting and insights on improving business performance, as it looks like your budgeting could possibly be improved.
The good news is that you have Dh500,000 owed to you and the banks are likely to enquire what arrangements are in place for the payback and whether this receivable can be partially or fully given as a collateral for your new borrowings. You should try and obtain this amount in two to three instalments so that you can pay back your suppliers to continue your business and clear your overdue payments. Once you find a bank that can help consolidate your debts (via a buyout), things will become easier to control and manage.
_________
Read more:
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Bounced cheques in UAE: new rules 'a progressive step for the justice system'
Listen:
Business Extra podcast: The Debt Panel, clampdown on bank fees and financial literacy
________
Debt panellist 2: Ambareen Musa, founder and chief executive of Souqalmal.com
Qualifying for a business loan is not possible for a number of small businesses, given the stringent eligibility criteria set out by banks. Therefore, many business owners like you turn towards personal finance. However, your exposure to debt, with the multiple loans and high-interest credit cards, has now left you in a financially vulnerable situation.
While you are expecting the state of your business to improve with the upcoming project, you must deal with your creditors right away to avoid facing legal action and late payment penalties. Explain your predicament to your lenders and negotiate with them to revise the repayment structure on your loans and credit cards. Ask them to extend your repayment tenure and possibly lower your interest rates.
Since you seem to have exhausted all means of credit, you must look inwards. First, try and figure out how you can trim business costs – is there unused equipment or space that you can lease out or workforce that you can shrink? Next, deal with your suppliers and reach out to them with payment options that will make them clear their dues faster. You could offer them some sort of discount or the option to make deferred payments. If nothing else works, consider resorting to legal recourse to recover the Dh500,000 payment that is overdue by almost a year.
Now that you've run up more debt than you can manage to repay and don't have any personal assets to fall back on, your only hope is a turnaround in the prospects of your business. But if the situation does not improve in the next few months, you may have to seriously think about selling the business and liquidating its assets to cut your losses.
__________
Read more:
The Debt Panel: Admin worker begs debt collectors for more time to repay Dh51,000 in loans
The Debt Panel: Single mother of four is being hounded by debt collectors over Dh43,000
It is possible to restructure debt directly with UAE banks, a Sharjah resident reveals how
A nine-step guide to help you renegotiate bank debts in the UAE
How an Abu Dhabi resident took three UAE banks to court and cleared Dh700,000 debt
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Debt panellist 3: Keren Bobker, an independent financial adviser with Holborn Assets
While I only have limited information about how the business functions and nothing regarding cash flow, this situation is clearly untenable. You are not only seriously behind with debt repayments but if employees are also not being paid this also has a knock-on effect on them.
I note you are owed Dh500,000 by a client but has any legal action been taken to recover this debt? Did you agree payment terms or request part payment upfront to defray any costs? I recommend seeking expert legal advice to recover this money, or at least part of it. Recovering some of the money owed would significantly improve the situation, allow for staff to be paid and some debt repayments.
While I am reluctant to suggest paying out any more money than is essential, good professional advice can be helpful in getting a business back on track. I assume there have been ongoing cash flow issues but understanding how to manage these, and how to manage a business properly is a skill; understanding the technicalities of a business is not the same as understanding how to run and manage one successfully.
It appears you are pinning hopes on one project but it is not good business practice to be almost wholly reliable on one customer. Also, if employees have filed cases with the Ministry of Human Resources and Emiratisation then the company is unlikely to be permitted to apply for more visas to expand the staff until cases are resolved.
If the business is not working, drastic measures may be required. Are there are assets that can be sold to reduce the debts, or at least get repayments paid to date? If payments are not made, and as they appear to be in one person’s name rather than in the company name, then your husband is going to be held liable by the creditors. Making some of the outstanding payments will help here or the banks have the right to take further action.
You say you work for the company but are you able to get work elsewhere so you can earn some money and help out your husband? I assume you are not taking an income if employees are not being paid, so having a steady income from elsewhere may assist.
The Debt Panel is a weekly column to help readers tackle their debts more effectively. If you have a question for the panel, write to pf@thenational.ae
Cultural fiesta
What: The Al Burda Festival
When: November 14 (from 10am)
Where: Warehouse421, Abu Dhabi
The Al Burda Festival is a celebration of Islamic art and culture, featuring talks, performances and exhibitions. Organised by the Ministry of Culture and Knowledge Development, this one-day event opens with a session on the future of Islamic art. With this in mind, it is followed by a number of workshops and “masterclass” sessions in everything from calligraphy and typography to geometry and the origins of Islamic design. There will also be discussions on subjects including ‘Who is the Audience for Islamic Art?’ and ‘New Markets for Islamic Design.’ A live performance from Kuwaiti guitarist Yousif Yaseen should be one of the highlights of the day.
Founder: Ayman Badawi
Date started: Test product September 2016, paid launch January 2017
Based: Dubai, UAE
Sector: Software
Size: Seven employees
Funding: $170,000 in angel investment
Funders: friends
Everybody%20Loves%20Touda
%3Cp%3E%3Cstrong%3EDirector%3A%3C%2Fstrong%3E%20Nabil%20Ayouch%C2%A0%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStarring%3A%3C%2Fstrong%3E%20Nisrin%20Erradi%2C%20Joud%20Chamihy%2C%20Jalila%20Talemsi%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%20%3C%2Fstrong%3E4%2F5%3C%2Fp%3E%0A
THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
Price: From Dh1,350,000
On sale: Available for preorder now
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Test
Director: S Sashikanth
Cast: Nayanthara, Siddharth, Meera Jasmine, R Madhavan
Star rating: 2/5
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
The five pillars of Islam
Ain Issa camp:
- Established in 2016
- Houses 13,309 people, 2,092 families, 62 per cent children
- Of the adult population, 49 per cent men, 51 per cent women (not including foreigners annexe)
- Most from Deir Ezzor and Raqqa
- 950 foreigners linked to ISIS and their families
- NGO Blumont runs camp management for the UN
- One of the nine official (UN recognised) camps in the region
More on Yemen's civil war
Company profile
Name: Thndr
Started: October 2020
Founders: Ahmad Hammouda and Seif Amr
Based: Cairo, Egypt
Sector: FinTech
Initial investment: pre-seed of $800,000
Funding stage: series A; $20 million
Investors: Tiger Global, Beco Capital, Prosus Ventures, Y Combinator, Global Ventures, Abdul Latif Jameel, Endure Capital, 4DX Ventures, Plus VC, Rabacap and MSA Capital
Unresolved crisis
Russia and Ukraine have been locked in a bitter conflict since 2014, when Ukraine’s Kremlin-friendly president was ousted, Moscow annexed Crimea and then backed a separatist insurgency in the east.
Fighting between the Russia-backed rebels and Ukrainian forces has killed more than 14,000 people. In 2015, France and Germany helped broker a peace deal, known as the Minsk agreements, that ended large-scale hostilities but failed to bring a political settlement of the conflict.
The Kremlin has repeatedly accused Kiev of sabotaging the deal, and Ukrainian officials in recent weeks said that implementing it in full would hurt Ukraine.
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Villains
Queens of the Stone Age
Matador
Common OCD symptoms and how they manifest
Checking: the obsession or thoughts focus on some harm coming from things not being as they should, which usually centre around the theme of safety. For example, the obsession is “the building will burn down”, therefore the compulsion is checking that the oven is switched off.
Contamination: the obsession is focused on the presence of germs, dirt or harmful bacteria and how this will impact the person and/or their loved ones. For example, the obsession is “the floor is dirty; me and my family will get sick and die”, the compulsion is repetitive cleaning.
Orderliness: the obsession is a fear of sitting with uncomfortable feelings, or to prevent harm coming to oneself or others. Objectively there appears to be no logical link between the obsession and compulsion. For example,” I won’t feel right if the jars aren’t lined up” or “harm will come to my family if I don’t line up all the jars”, so the compulsion is therefore lining up the jars.
Intrusive thoughts: the intrusive thought is usually highly distressing and repetitive. Common examples may include thoughts of perpetrating violence towards others, harming others, or questions over one’s character or deeds, usually in conflict with the person’s true values. An example would be: “I think I might hurt my family”, which in turn leads to the compulsion of avoiding social gatherings.
Hoarding: the intrusive thought is the overvaluing of objects or possessions, while the compulsion is stashing or hoarding these items and refusing to let them go. For example, “this newspaper may come in useful one day”, therefore, the compulsion is hoarding newspapers instead of discarding them the next day.
Source: Dr Robert Chandler, clinical psychologist at Lighthouse Arabia
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
