Saudi Arabia’s longest debt dispute ended with the issuance of a final court order to restructure the Ahmad Hamad Algosaibi & Brothers family conglomerate, or Ahab.
The commercial court in Dammam on Sunday issued the unattractive order, which is expected to repay 26 cents in dollars on $ 27.5 billion ($ 7.3 billion) debt outstanding when the company went bankrupt in 2009.
“It was a very long, expensive and painful process, especially for the Algosaibi family,” said Simon Charlton, head of Ahab’s restructuring office. “The issuance of the final ratified order to approve the settlement indicates one of the largest [and] the longest disputes in the region. ”
Under the settlement, Ahab will hand over more than 90 percent of its assets, including shares and real estate worth approximately SR5.2 billion, to sell to repay creditors. The 19 partners of the enterprise – members of the al-Gosaibi family – will contribute SR2 billion and retain most of the businesses, including a shipping company, a shopping center and a hotel.
Ahab will work closely with the authorities to lift the restrictions on assets and liquidate them to provide returns to creditors. Charlton said he hopes to make ‘substantial distributions’ by the end of 2021.
The 12-year saga upset Ahab, one of the kingdom’s most important trading families, against Maan al-Sanea, a family member from the marriage, which owned Saad Group.
The collapse of the Agab and Seed groups in 2009 – the biggest regional victims of the global financial crisis – expressed concern about corporate governance in the Middle East and the prevalence of ‘name loans’, the inability of impossible businesses to take out large loans on the basis of their reputation.
Creditors, including Saudi Arabia, regional and international banks, have pursued more than $ 32 billion in debt from both companies in court cases around the world, with both parties accusing each other of fraud.
In 2018, a court in the Cayman Islands ruled Ahab and Saad are complicit in $ 126 billion fraud described as one of the “greatest Ponzi schemes in history”.
Charlton said Ahab was appealing the verdict against hearings in May and June 2019, but no decision was made.
Saad Investment, based in Ahab and in Cayman, a connected but separate entity, has since settled claims against each other to be able to make both payments to creditors, he added. Ahab continues to sue Saad Trading in Saudi Arabia.
The court began the restructuring process in May 2019 using a new 2018 bankruptcy law aimed at modernizing the operating environment and ensuring equitable treatment of creditors.
“It was a difficult learning process for everyone and a real evolution in the Saudi legal system has led to a climax in the new bankruptcy law,” Charlton said.