Wednesday, Sep 22, 2010

Gulf News

Insolvency administrator says funds are illiquid and overindebted

Dubai The bankruptcy case concerning four Dubai property funds of German Alternative Capital Invest (ACI) is likely to turn into a disaster for investors.

As reported by Gulf News two weeks ago, the biggest Dubai property investment company in Germany declared bankruptcy for four of its seven funds on September 10. ACI was planning towers named after celebrities such as F1 drivers Michael Schumacher and Niki Lauda, and tennis champion Boris Becker.

But it ran out of money after the property market reached its peak in 2008 and began to decline, leaving the projects unfinished. People close to the matter said up to 8,000 investors had paid a total capital of 210 million euros (Dh1 billion) into the funds.

However, some investors were reported to have received profit distributions from the first ACI fund of around 13.8 million euros.

Problem

ACI insolvency administrator Norbert Westhoff was quoted by the German daily Neue Westfaelische as saying: In case there have been profit distributions although the fund did not yield any profit, then it is likely to become problematic for investors.

He would be legally committed to ask for the money to be paid back, as investors were not seen as creditors in the bankruptcy case. Creditors are people who have bought apartments and offices in the unfinished buildings, he said. This means ACI investors might lose everything. Besides the celebrity towers, ACI ventures comprise the Dubai Star tower in Jumeirah Lake Towers, the Q Sami tower and Victory Bay in Business Bay, PKS Residences and the Mayfield Gardens projects in Jumeirah Village and also the Ferretti and Pershing Beach Residences projects in the Waterfront.

The funds are overindebted and illiquid, Westhoff said. ACI founder Hanns-Uwe Lohmann has resigned as ACIs chief executive officer and is said to have left the country.

The German public prosecution recently raided the companys head office in Guetersloh. Calls by Gulf News to the ACI office at a villa in Jumeirah remained unanswered by press time.

By Arno Maierbugger?Deputy Business Editor

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