The Cayman Islands Grand Court on Friday ordered the liquidation and winding up of several Cayman Islands-based companies belonging to SAAD Group.
Saudi firm SAAD Group is currently in a legal battle with fellow Saudi family conglomerate Ahmad Hamad Al Gosaibi and Brothers. AHAB claims that SAAD Group owner Maan Al Sanea, during his time as head of AHAB’s financial services arm, the Money Exchange, falsified documents and committed fraud by diverting Algosaibi funds to his own SAAD companies. The Cayman Grand Court subsequently froze US$9.2 billion in assets belonging to Maan Al Sanea and his companies.
AHAB claimed that the fraud was detected when both companies experienced serious financial difficulties in April and May. Both groups have since defaulted on financial obligations, triggering a series of lawsuits as banks attempt to collect the funds they are owed through the courts.
On Friday, creditors of SAAD Group petitioned the Cayman Grand Court in two cases involving SAAD Investments Company Limited and SAAD Investments Finance Company (No.5).
Law firm Walkers represented Barclays, CaLyon, Royal Bank of Scotland and thirteen supporting creditor banks, which provided a syndicated credit facility to SAAD Investment Company Limited. The three lead banks are owed US$608 million and the thirteen supporting creditors lent US$1.7 billion. Other creditors who also advanced funds under the facility totalling US$2.8bn were not represented by Walkers but did not object to the petition.
SAAD Investments Company Limited functions both as a holding company for SAAD Group in the Cayman Islands and as a private investment company holding some of the offshore assets of Mr. Al Sanea.
On behalf of the creditors, Walkers lawyers argued that SAAD Investments Company Limited had missed interest payments and broken several other covenants set out in the loan agreement, including the non-provision of requested financial information and the withdrawal of the company’s credit rating by Moody’s in June.
The creditors sought and were granted an order for SAAD Investments Company Limited to be wound up and Hugh Dickson, Stephen John and Mark Byers of Grant Thornton to be appointed as official liquidators of SICL. The official liquidators were given wide-ranging powers by the court in accordance with the Companies Law to secure and sell the assets of SAAD Investments Company Limited
The court heard that the liquidators had, in their capacity as joint provisional liquidators, been in constant contact with SAAD Financial Services in Geneva, which performs back office functions for SAAD Investments Company Limited, and established that the latter company was owed US$171 million by Singularis, another SAAD company based in the Cayman Islands. Most of the debt, $150 million of the $171 million, could be substantiated through supporting documentation.
Singularis Holdings was used by Maan Al Sanea as an investment firm, among others, to purchase a 3.1 per cent stake of global bank HSBC in 2007.
Singularis was also named as one of the defendants in the case brought forward by AHAB, claiming that Singularis conspired with Maan Al Sanea and received AHAB funds that were either misappropriated or transferred in a breach of fiduciary duty by Mr Al Sanea.
Mr Al Sanea passed a resolution on 20 August to place Singularis in voluntary liquidation and appointed James Cleaver and Richard Fogarty of Zolfo Cooper as joint provisional liquidators of the company.
Walkers argued that, in contrast to voluntary liquidation, liquidation under the supervision of the court would be more effective, economic and expeditious for the creditors.
The court discharged the receivers, relieved them of their duties and appointed the liquidators of SAAD Investments Company Limited also as the official liquidators of Singularis.
AHAB represented through Cayman law firm Mourant du Feu & Jeune did not oppose the petition.
In a related case brought forward by Barclays against SAAD Investment Finance Company (No.5), the court appointed Geoffrey Varga and Nicolas Matthews of Kinetic Partners as official liquidators, granting them similar powers as in the other two cases.
SAAD Investments Finance Company (No.5) is a financing arrangement between SAAD Investments Company Limited and Barclays Bank adopted to leverage the Investment Company’s holding in private equity funds. Under the agreement Barclays became joint shareholder with both of the SAAD entities. SAAD Investments Company Limited acted as investment manager and Maan Al Sanea was named as one of the directors of the company.
Other creditors have filed cases against SAAD companies in New York, London and Geneva. The wide range of creditors of SAAD companies was also reflected in the large number of representatives from Cayman law firms observing the case in court without being directly involved.
Meanwhile Alogosaibi has widened the litigation against SAAD to SAAD Financial Services in Geneva on Friday, accusing the SAAD subsidiary of fraud. Swiss newspaper La Tribune de Geneve reported on Saturday that the offices of SAAD Financial Services in Geneva had been searched.