Manama: One of the Middle East’s longest-running debt disputes, which followed the collapse of two Bahraini banks, has inched a step closer to being resolved.
Ahmad Hamad Algosaibi and Brothers (AHAB) has signed a deal with a committee representing creditor banks to restructure the Saudi Arabian family conglomerate’s debt pile, it said in a statement yesterday.
The multi-billion dollar dispute has pitted the hospitality, food and real estate group against some of the world’s biggest financial institutions.
More than 100 creditors, including seven banks in Bahrain claim that AHAB and entities such as AHAB’s Money Exchange and other businesses in Bahrain, including Algosaibi Trading Services and Algosaibi Investment Holdings together owe them an estimated $22bn.
However, AHAB claims the debt was run up against its knowledge by businessman Maan Al Sanea, who married into the family.
AHAB and Mr Al Sanea have been at loggerheads since mid-2009 after the collapse of two Bahraini banks, Awal Bank and The International Banking Corporation (TIBC).
Both banks were put into administration by the Central Bank of Bahrain after defaulting on massive debts. AHAB last June disclosed its direct liabilities to banks and financial institutions were around 22.5bn Saudi riyals ($6bn).
The GDN reported in 2014 that lawsuits had been filed against AHAB by more than 65 banks in 10 countries to recover money.
Awal Bank was part of Mr Al Sanea’s Saad Group, which is also facing multiple legal battles over debts run up by both banks.
Meanwhile, TIBC shareholders and directors were on paper members of the AHAB conglomerate, but AHAB claims it had nothing to do with the bank and that Mr Al Sanea was also responsible for TIBC. However, Mr Al Sanea has denied wrongdoing.
Bankruptcy law is opaque and untested in Saudi Arabia, part of the reason for the uncertainty surrounding the process and why the restructuring of AHAB has lasted so long.
In May this year, AHAB said it had written to a large number of financial institutions with claims against it to confirm the amounts that it is willing to acknowledge for the purposes of the settlement process it initiated in May 2014.
The GDN had reported in January that AHAB put a revised restructuring plan to its creditors, building on an initial proposal submitted to claimants last June, when creditors were offered a minimum return of 28 cents on every dollar owed.
Now, according to a statement, the five-member creditor grouping and AHAB have signed a formal commitment to implement January’s plan.
The five creditors chosen to negotiate on behalf of all claimants are Bank ABC, BNP Paribas, Emirates NBD, Fortress Investment Group and Standard Chartered.
AHAB hopes to secure signed agreements with other claimants for the restructuring plan “as soon as possible over the coming weeks”, the statement added.
The restructuring plan still requires the assent of a three-judge panel at a court in Khobar, in eastern Saudi Arabia, which has been appointed to oversee the claims against AHAB.
The panel was announced by the Saudi authorities in April.
By securing the assent of as many of the creditors as possible, AHAB is hoping to create momentum for the plan’s approval and its enforcement by the court.
The judicial panel had asked all creditors to submit their claims against AHAB to them by July 21, although AHAB has recently requested an extension of the deadline, according to the statement.
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