The fate of the Cayman-registered Abraaj Holdings could be decided on Sept. 3, when a determination is scheduled over whether the troubled company will be liquidated and wound up, or will continue undergoing court-supervised restructuring.
Abraaj Holdings is a major part of the Abraaj Group, which was once the largest private equity firm in the Middle East. However, the firm allegedly owes creditors some US$1 billion and has been accused of misusing hundreds of millions of dollars, including funds from the Bill & Melinda Gates Foundation and the World Bank’s International Finance Corporation.
In May, Kuwait’s Public Institution for Social Security filed a petition to wind up Abraaj Holdings and liquidate its assets after Abraaj allegedly defaulted on a US$100 million loan. Abraaj Holdings also filed an application, this one to have provisional liquidators appointed over it, which the firm said would allow it to restructure its debt, protect the rights of all stakeholders, and continue its day-to-day operations with minimum impact.
The Grand Court granted Abraaj Holdings’ application for provisional liquidators. However, it was said at a Grand Court hearing on Wednesday that Abraaj’s attempts to sell assets and restructure have not been as successful as hoped, which led to a renewed effort to liquidate and wind up Abraaj.
“Since March, attempts have been made to sell various assets from the Abraaj Group and to restructure. One the 18th of June, when orders were made [to appoint provisional liquidators of Abraaj], they were made on the basis that the company intends to make a compromise with creditors,” said Charles Falconer QC, an attorney for one of Abraaj’s creditors. “Now, their position is that ‘we don’t know whether it’s going to be possible for a compromise to be made.’”
At the end of the hearing, Grand Court Justice Robin McMillan scheduled another hearing to take place on Sept. 3. At that hearing, it will be determined whether Abraaj will continue to remain under provisional liquidators – allowing it to restructure – or whether it will be liquidated and wound up.
Between now and then, the provisional liquidators will submit a report to the Grand Court and to the creditors about the efforts to sell Abraaj’s assets and about the likelihood of reaching a compromise or arrangement between Abraaj and its creditors. Much of this depends on whether the provisional liquidators can sell Abraaj’s asset-management platform, according to an attorney involved in the case.
More than 30 lawyers were present during Wednesday’s hearing.