Orion wound up after spat with investors

Orion Holding Overseas, a Dubai-based financial services firm once valued at almost Dh1 billion, was ordered to be involuntarily wound up.

Orion Holding Overseas, a financial services firm once valued at almost Dh1 billion (US27.7 million), was yesterday ordered to be involuntarily wound up. @Body:The move marked the end of a bitter dispute between shareholders and the failed Dubai company's management. Justice Sir John Chadwick ordered the company's liquidation at the Dubai International Financial Centre (DIFC) Court after Orion's shareholders failed to voluntarily close the company. "A voluntary winding-up did not proceed, but nevertheless there was a need for a winding-up," Justice Chadwick said. It is only the third insolvency case to be tried at the DIFC Court. The DIFC, a free zone with its own commercial laws, has what experts consider to be a more robust insolvency regime than that in the local courts. Lawyers expect a slew of insolvency cases to be heard in the DIFC Court in the coming months as more businesses face challenges as a result of the financial downturn. The court might also host a special tribunal for creditors of Dubai World to make claims against the company, according to a decree from Sheikh Mohammed bin Rashid, the Vice President of the UAE and Ruler of Dubai. The decision to force Orion Holding Overseas to wind up ends an eventful time for the company, which was engaged in businesses ranging from commodities trading to a stock brokerage. Orion first came into the spotlight in January 2008 when Shuaa Capital, an investment bank in Dubai, bought a 20 per cent stake for Dh193m, according to a statement announcing the deal. That purchase valued the company at Dh965m. But over the next two years the company began losing money and business eventually ground to a halt. Shuaa said in its third-quarter earnings note last year that Orion had "ceased to trade" and that "the directors of the entity have voted to liquidate the company but a resolution to liquidate failed to achieve the necessary majority in a vote by shareholders". Justice Chadwick said yesterday: "The position during the summer of 2009 was that the company had effectively ceased doing business, was no longer paying employees and was trying to dispose of assets." These challenges played a role in losses of Dh269.7m posted by Shuaa in the third quarter, which included a Dh258.9m impairment on the value of investments, including Orion. Kaashif Basit, the managing director of JSA LAW, the lawyers for the company, described during a separate hearing on Monday how the company faltered as shareholders engaged in a "blame game" that led to an effective "paralysis of day-to-day business". Orion's shareholders include Petra Invest of Jordan, which owns 32 per cent of the company, Shuaa Capital and several other investment groups. The company's downfall has been blamed in part on a long-running and still unresolved dispute between the major investors over the management of the company. The situation became more complicated as former employees filed lawsuits against the company to obtain money they claimed was owed. Last November, 13 former employees alleged that Orion owed them money but was "winding up without filing for liquidation". They also alleged that Orion failed to pay benefits awarded by courts and that the company was selling off assets. A judge ordered Orion's assets temporarily frozen, but soon after overturned the order. The frozen assets included accounts at Abu Dhabi Commercial Bank and Standard Chartered, and apartments in the AG Tower in the Jumeirah Lakes Towers development in Dubai. These assets will form a major part of the liquidation. Justice Chadwick also appointed Shahab Haider as the provisional liquidator for Orion. He is to oversee the sale of the company's assets and use the proceeds to compensate employees and creditors. @Email:[e-mail] [e-mail]