Going bust, going home



We yammer on a lot about reform here in the UAE: how all sorts of things, from land sale registration to corporate boards, need to be brought up to international snuff. It's comparatively rare, though, that we get to attach a human face like Simon Ford's to what are for the most part purely abstract issues.

That's why today's story in The National about Mr Ford's internet business, Blue Banana, is so poignant. A number of government officials and economists have in the past month or so urged for more robust laws covering businesses that go bust, partly to prevent against the kind of situation Mr Ford now finds himself in.

I'll spare you all the legal details here (you can read about them in the story), but the situation is basically this: the UAE has laws covering bankruptcies, but they remain largely untested by the UAE's court system. When they run into trouble, companies tend to make settlements out of court, both because of the uncertainty surrounding how courts might treat them and the length of time it might take to process a case, as well as the attendant costs. It takes 3.5 years for a business to close in the Middle East, according to a recent World Bank report, compared to 1.7 years in the developed world. If you want more background on this, check out this story I wrote earlier this month.

In a letter to friends and former business partners, Mr Ford put partial blame for his sudden departure from the country on this underdeveloped insolvency system. "I am not running away from debt," he wrote. "I am purely protecting those dearest to me and getting out of a country which, due to the lack of structured bankruptcy laws and a banking system which has zero flexibility on loan repayments, drives people to make horrible decisions."

Mr Ford isn't alone here, and it's not only the owners of struggling businesses who are taking a hit. Employees of those troubled firms have also been left in the lurch. Take the story of Gary Bell, whom I wrote about in my original story on insolvency this month. Mr Bell hasn't been paid for about six months, and the company he came to the UAE to work for is in some serious financial straits. The company's owner has repeatedly told Mr Bell that he, along with other employees, would be paid, but as weeks stretched into months, no money was forthcoming. He has since filed in court to retrieve what he's owed.

I asked Mr Bell what he thought about Mr Ford's situation because I thought it sounded like they were dealing with some of the same issues: both companies found themselves unable to pay suppliers (and in Mr Bell's case, employees), and neither went to the courts for a resolution. Here's what he had to say:

"I think he is in the same situation as our [managing director], where they got in debt too deep, they tried to keep the dream alive and started to gamble with other people's money on the hope that something would turn up that would save the company," he wrote in an e-mail. "... I have sympathy for Simon and and it's good to see that Simon will try and do the decent thing but at the end of the day, no-one asked him to start a business, run it the way he did or continue when he knew there were financial problems... not his suppliers, financial institutions or staff who will be the ones presumably bearing the cost for the decisions made by Simon."

"It's a bit of a mess in Dubai and a lot of innocent people have been caught in the crossfire," he added. "I only hope lessons have been learned by all parties."

COMPANY PROFILE

Name: SmartCrowd
Started: 2018
Founder: Siddiq Farid and Musfique Ahmed
Based: Dubai
Sector: FinTech / PropTech
Initial investment: $650,000
Current number of staff: 35
Investment stage: Series A
Investors: Various institutional investors and notable angel investors (500 MENA, Shurooq, Mada, Seedstar, Tricap)

In Full Flight: A Story of Africa and Atonement
John Heminway, Knopff

The past winners

2009 - Sebastian Vettel (Red Bull)

2010 - Sebastian Vettel (Red Bull)

2011 - Lewis Hamilton (McLaren)

2012 - Kimi Raikkonen (Lotus)

2013 - Sebastian Vettel (Red Bull)

2014 - Lewis Hamilton (Mercedes)

2015 - Nico Rosberg (Mercedes)

2016 - Lewis Hamilton (Mercedes)

2017 - Valtteri Bottas (Mercedes)

'Saand Ki Aankh'

Produced by: Reliance Entertainment with Chalk and Cheese Films
Director: Tushar Hiranandani
Cast: Taapsee Pannu, Bhumi Pednekar, Prakash Jha, Vineet Singh
Rating: 3.5/5 stars

COMPANY PROFILE

Company name: Almouneer
Started: 2017
Founders: Dr Noha Khater and Rania Kadry
Based: Egypt
Number of staff: 120
Investment: Bootstrapped, with support from Insead and Egyptian government, seed round of
$3.6 million led by Global Ventures

Griselda

Director: Andrés Baiz

Starring: Sofía Vergara, Alberto Guerra, Juliana Aiden Martinez

Rating: 4/5

Seven tips from Emirates NBD

1. Never respond to e-mails, calls or messages asking for account, card or internet banking details

2. Never store a card PIN (personal identification number) in your mobile or in your wallet

3. Ensure online shopping websites are secure and verified before providing card details

4. Change passwords periodically as a precautionary measure

5. Never share authentication data such as passwords, card PINs and OTPs  (one-time passwords) with third parties

6. Track bank notifications regarding transaction discrepancies

7. Report lost or stolen debit and credit cards immediately

Company profile

Name: Yodawy
Based: Egypt
Founders: Karim Khashaba, Sherief El-Feky and Yasser AbdelGawad
Sector:
HealthTech
Total funding: $24.5 million
Investors: Algebra Ventures, Global Ventures, MEVP and Delivery Hero Ventures, among others
Number of employees:
500

KEY DATES IN AMAZON'S HISTORY

July 5, 1994: Jeff Bezos founds Cadabra Inc, which would later be renamed to Amazon.com, because his lawyer misheard the name as 'cadaver'. In its earliest days, the bookstore operated out of a rented garage in Bellevue, Washington

July 16, 1995: Amazon formally opens as an online bookseller. Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought becomes the first item sold on Amazon

1997: Amazon goes public at $18 a share, which has grown about 1,000 per cent at present. Its highest closing price was $197.85 on June 27, 2024

1998: Amazon acquires IMDb, its first major acquisition. It also starts selling CDs and DVDs

2000: Amazon Marketplace opens, allowing people to sell items on the website

2002: Amazon forms what would become Amazon Web Services, opening the Amazon.com platform to all developers. The cloud unit would follow in 2006

2003: Amazon turns in an annual profit of $75 million, the first time it ended a year in the black

2005: Amazon Prime is introduced, its first-ever subscription service that offered US customers free two-day shipping for $79 a year

2006: Amazon Unbox is unveiled, the company's video service that would later morph into Amazon Instant Video and, ultimately, Amazon Video

2007: Amazon's first hardware product, the Kindle e-reader, is introduced; the Fire TV and Fire Phone would come in 2014. Grocery service Amazon Fresh is also started

2009: Amazon introduces Amazon Basics, its in-house label for a variety of products

2010: The foundations for Amazon Studios were laid. Its first original streaming content debuted in 2013

2011: The Amazon Appstore for Google's Android is launched. It is still unavailable on Apple's iOS

2014: The Amazon Echo is launched, a speaker that acts as a personal digital assistant powered by Alexa

2017: Amazon acquires Whole Foods for $13.7 billion, its biggest acquisition

2018: Amazon's market cap briefly crosses the $1 trillion mark, making it, at the time, only the third company to achieve that milestone

COMPANY PROFILE

Name: Haltia.ai
Started: 2023
Co-founders: Arto Bendiken and Talal Thabet
Based: Dubai, UAE
Industry: AI
Number of employees: 41
Funding: About $1.7 million
Investors: Self, family and friends

Company Profile

Company name: Cargoz
Date started: January 2022
Founders: Premlal Pullisserry and Lijo Antony
Based: Dubai
Number of staff: 30
Investment stage: Seed


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