Bankruptcy court ruling became central in Dubai after a commercial court ordered a construction company to pay Dh28.7 million. The payment goes to an electromechanical firm that went bankrupt due to unpaid project funds. The decision underscored the risks contractors face when delaying payments.
The dispute started in 2017 with a Dh113 million subcontract. The deal covered electrical, mechanical, and plumbing works on a major real estate project. The subcontractor finished nearly all tasks, completing between 99 and 100 percent of work. However, the contractor withheld payments and liquidated guarantees without explanation.
As a result, the supplier quickly fell into financial trouble. Suppliers, subcontractors, and employees went unpaid. Consequently, the company announced bankruptcy in 2022. A court expert later confirmed Dh77.6 million was owed for the work performed.
When talks failed, the bankrupt firm sued for overdue payments plus Dh20 million in damages. In response, the contractor countered with a Dh39.6 million claim. They accused the subcontractor of delays and defects. However, engineering, accounting, and scheduling experts rejected those claims. Their findings validated only the subcontractor’s entitlement to outstanding dues.
The court also dismissed the contractor’s counterclaim and ruled they must pay legal costs. This strengthened the subcontractor’s argument that delayed payments caused its collapse. The judgment reinforced protections for struggling firms through UAE bankruptcy procedures.
The case demonstrates how unresolved disputes can escalate into bankruptcy court rulings. It also highlights how expert panels play a decisive role in resolving technical claims. Furthermore, it shows the importance of clear project management and financial responsibility in Dubai’s construction sector.
Dr. Alaa Nasr, the firm’s legal representative, highlighted the strength of UAE insolvency law. He explained that the framework protects bankrupt firms while supervising debtor assets. Therefore, the ruling not only addressed one dispute but also underscored the broader protections available under national law.
Ultimately, the bankruptcy court ruling illustrates how justice balances responsibility in complex construction cases. The outcome also sends a strong message to contractors about timely payments and the financial survival of subcontractors.
