Abraaj files for liquidation in Cayman Islands

The GP is seeking a court-supervised restructuring in the Grand Court of the Cayman Islands, and has asked to appoint Simon Conway of PwC Corporate Finance and Recovery, and Michael Jervis and Mo Farzadi of PwC, as joint provisional liquidators.

The appointment "imposes a moratorium on the enforcement of all unsecured claims against the company", according to the Abraaj statement, claiming its secured creditors supported the decision.  

Abraaj was pressured into action after the Auctus Fund, a large creditor of the group, filed a petition on Friday last week to have the Cayman Islands court oversee a debt restructuring process, according to the Wall Street Journal.

The Auctus Fund holds a loan made by the United Arab Emirates' Jafar family to Abraaj and is seeking to recover around $100m from the court-run restructuring.

To some industry observers, the move by Auctus is not entirely clear from a creditor point of view.

"In general, creditors don't care about value destruction of a company in distress, they care about getting paid back. A liquidation sells everything, pays creditors back first and anything left over goes to equity holders," says Sabah Hamad al-Sabah al-Binali, CEO at advisory firm Universal Strategy.

A restructuring would seek to pay creditors but also protect the value of the equity holders. It also takes longer to pay off the creditors.

In a statement issued earlier in June, the private equity group said it was negotiating a standstill agreement with secured creditors for debt that is reportedly north of $1bn.

Since earlier this year, the firm has been embroiled in an investor conflict over claims of delays in receiving fund returns. It suspended deployment activities of its private equity funds in February 2018 and founder Arif Naqvi stepped down from his role as CEO.

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• Topics
• GPs
• CEE
• Abraaj Capital