BAHRAIN: Arcapita Bank has filed for Chapter 11 bankruptcy protection in the US after failing to reach an agreement with creditors for the repayment of its US$1.1 billion syndicated financing maturing on the 28th March.
The private equity firm’s board said that it approved the filing in order to protect its business and assets as well as to implement a comprehensive restructuring.
The Chapter 11 provisions will enable Arcapita’s board and management to operate the firm’s business and make decisions related to asset disposal.
In its first-day pleadings, the bank asked the bankruptcy court for an order that specifies foreign creditors cannot seize its assets, worth US$3.06 billion.
“The debtors have foreign operations with potentially large numbers of foreign creditors and counterparties to contracts who may be unaware of the global-reaching prohibitions and restrictions of the Bankruptcy Code,” lawyers for the company wrote.
Its lawyers also noted that: “This global recession has hampered the Arcapita group’s ability to obtain liquidity from the capital markets and has also resulted in a reduction in asset values.”
Arcapita’s legal advisors are Gibson, Dunn & Crutcher and Linklaters, while its financial advisor is Rothschild.