Emaar Properties Files Chapter 11 for John Laing Homes

Emaar's Dubai Marina

Emaar properties, the Dubai government owned property firm and owners of WL Homes, which trades as John Laing, have filed for bankruptcy protection for John Laing, after writing down $482 million in goodwill. Emaar purchased John Laing in 2006 for over $1 billion when the company was building as many as 3,000 homes a year, and sales have since fallen to less than 600 units in 2008.

It would seem that this is a strategic move on the part of Emaar to limit their losses. WL Homes listed assets of more than $1 billion and debt of $500 million to $1 billion in Chapter 11 documents filed in U.S. Bankruptcy Court in Delaware. Revenue fell to $287 million in 2008, compared to $948 million in 2007, and it would appear that more write downs are in order.

Emaar officials were not available to comment after the news was announced, but earlier, Chairman Mohammed Al Abbar said, “The primary focus of Emaar in the last quarter of the year was to mitigate the negative impact of the global financial crisis by facing up to the new economic realities and identifying innovative strategies to sustain businesses in an unprecedented downturn.”

Emaar shares immediately fell another 10%, as did many other Dubai property company shares and the Dubai exchange closed 4.33% lower with the largest one-day loss in more than a month. Emaar’s shares have so far fallen 85% in the last year. Although John Laing are by no means the first home builder to file for bankrptcy protection, they are one of the largest home builders in the United States and this does not bode well for the smaller companies.