Dubai food conglomerate IFFCO set to go into provisional liquidation
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One of Dubai’s largest food companies is set to be placed into provisional liquidation, following months of stalled restructuring talks complicated by a dispute between its main shareholders and the US-Israeli war against Iran.
An HSBC Holdings Plc-led group of lenders to IFFCO Group, a privately held conglomerate with a $2bn debt pile, has turned to the courts in a bid to wrest control of the business from its owners, according to people familiar with the situation.
Creditors have nominated FTI Consulting as provisional liquidator in courts in the Isle of Man and Singapore, where two of IFFCO’s main legal entities are based, the people said.
Provisional liquidation is a temporary court-ordered measure designed to prevent a company’s financial position from deteriorating before a permanent decision is made on whether or not to liquidate it.
The appointment of a liquidator is designed to boost creditors’ chances of preserving their assets, the people added.
IFFCO did not respond to requests for comment.
IFFCO, which has more than 12,000 employees and is active in 50 countries, operates several food companies selling products including olive oil, biscuits, poultry and animal feed. To many Dubai residents, the company is known as the operator of the London Dairy ice cream brand.
For the United Arab Emirates, where the bulk of IFFCO’s business is based, the company’s problems coincide with disruption to the nation’s food supply chain since the end of February due to the Iran war.
Heavily dependent on food imports via shipping, the closure of the Strait of Hormuz by Iran has forced the country to reroute some of its imports by land and rely more on locally sourced products, which has added to pressure on IFFCO’s supply chains.
Nominating FTI marks an escalation in creditors’ efforts to protect their exposure and to preserve any remaining value in the company.
IFFCO was founded by Abdul Razak Allana but the business is now led by his sons, Feroz, Irfan and Shiraz Allana. Its financial troubles surfaced last year as a result of a rift between the brothers, and since then it has been struggling to service its $2bn debt pile. HSBC is a key creditor alongside several Dubai and Abu Dhabi-based lenders.
IFFCO entered into negotiations with its lenders last year when it brought in Alvarez & Marsal as an adviser, which was replaced by Rothschild & Co. a few months later. The company appointed a new independent board in response to creditor pressure and turned to Abdul Wahab Al-Halabi — a regional restructuring veteran — late last year in a bid to improve corporate governance and stabilise its operations.
Two weeks ago that board was restructured by the brothers, triggering the decision by lenders to file for provisional liquidation, the people familiar with the situation said.
HSBC said: “We do not comment on client or legal matters.” FTI did not respond to a request for comment.
