The Cayman-registered Abraaj Holdings – a Middle Eastern private equity firm facing allegations that it has misused hundreds of millions of dollars, including funds from the Bill & Melinda Gates Foundation and the World Bank’s International Finance Corporation – is facing two petitions in Grand Court, one to have the court to restructure its debt and the other to liquidate the company.
On Friday, the private-debt specialist Auctus Fund filed documents with the Grand Court alleging that Abraaj owes it about US$300 million. According to the Wall Street Journal, Auctus wants to use the Cayman Islands court system to create a process that allows Abraaj to stave off collapse and repay its $1 billion in debt in an “orderly and optimal fashion.”
Auctus’s filings come after another institution, Kuwait’s Public Institution for Social Security, filed a petition to liquidate Abraaj, according to a June 6 filing in the Cayman Gazette. The Public Institution for Social Security – which manages Kuwait’s social security system – filed the petition after the Abraaj Group allegedly defaulted on a US$100 million loan.
The petition to wind up the Abraaj Group will be heard on June 29, the Gazette filing states.
According to a June 7 report from Reuters, the liquidation petition is frustrating Abraaj’s efforts to sell its investment management business.
“Kuwait’s Public Institution for Social Security has refused to join other creditors in a debt freeze, complicating Abraaj’s efforts to sell its investment management business to New York-based Cerberus Capital Management,” Reuters reported.
Abraaj, for its part, reportedly stated that it is working with the Public Institution for Social Security to reach a deal “for the benefit of all parties.”
Bloomberg also reported on Tuesday that Abraaj may file for a court-supervised provisional liquidation itself, which would allow the investment firm to restructure debt, negotiate with creditors, and sell assets.
The Abraaj Group made headlines in February, when the Wall Street Journal reported that the Bill & Melinda Gates Foundation and other investors hired a forensic accountant to look into possible misuse of money they had put into a $1 billion Abraaj healthcare fund.
The audit allegedly found that Abraaj did not spend all of the money as promised on hospitals in countries including India and Nigeria, according to the Wall Street Journal. Instead, the audit reportedly showed that Abraaj transferred some money out of the healthcare fund. The audit did not show what the money was specifically used for, the Wall Street Journal reported.
Abraaj has denied any wrongdoing.