John Laing Homes files for bankruptcy



John Laing Homes, an American builder bought by Emaar Properties in 2006 for $1.05bn (Dh3.85bn), has filed for bankruptcy. The firm filed for protection in the US on Thursday under Chapter 11 bankruptcy laws, which shield companies from creditors as they restructure or sell off assets to repay debts. John Laing owes roughly $977m to banks and other creditors and has assets worth $1.3bn, court papers show.

Emaar's purchase of John Laing in June 2006 was the cornerstone of its effort to expand into the US housing market. But Emaar, the Middle East's largest developer, made the foray as the US housing market peaked. With mortgage lending grinding to a standstill and US home prices down 25 per cent between June 2006 and last November, according to the Case-Shiller US Home Price Index, the 161-year-old John Laing has retrenched, laying off employees and scaling back operations.

The problems come just as Emaar confronts challenges of its own in the Middle East, where property prices have declined significantly and financing for projects has grown harder to come by amid tightening international credit markets. According to documents filed in bankruptcy court, John Laing has been concentrating on its core business in southern California. It has closed divisions in Texas, Arizona, Colorado, Florida and northern California and laid off 1,010 workers, reducing its workforce to 90. The builder also plans to close Emaar Design Studios, a division created in 2007 as part of the company's expansion, by March 31. All its 13 employees are to be laid off.

John Laing may also cancel projects it has undertaken jointly with Emaar, according to the filing, which was written by Bradley Sharp, John Laing's chief restructuring officer. The document did not specify which projects may be in jeopardy. "The debtors are in the process of analysing which, if any, of the Emaar-related projects will continue in the future and only intend to proceed with those projects that, in the exercise of their business judgment, will provide a benefit to the debtors' estates and creditors and for which the debtors will be compensated by Emaar," the filing said.

The troubles at John Laing have already put a dent in Emaar's earnings. All of Emaar's loss of Dh1.76bn (US$480m) for the fourth quarter of last year was attributable to the performance of the American builder. Emaar last week said it wrote down Dh1.77bn in the fourth quarter on its investment in the company, and took an additional Dh919m write-down because of reductions in the value of John Laing's property holdings. Excluding these losses, Emaar would have posted a Dh924m profit in the quarter.

afitch@thenational.ae

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Focus on gratitude: And do so deeply, he says. “Think of one to three things a day that you’re grateful for. It needs to be specific, too, don’t just say ‘air.’ Really think about it. If you’re grateful for, say, what your parents have done for you, that will motivate you to do more for the world.”

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The internal combustion engine is facing a watershed moment – major manufacturer Volvo is to stop producing petroleum-powered vehicles by 2021 and countries in Europe, including the UK, have vowed to ban their sale before 2040. The National takes a look at the story of one of the most successful technologies of the last 100 years and how it has impacted life in the UAE. 

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