Arcapita Bank and several of its affiliates, including Arcapita Investment Holdings, have filed for bankruptcy protection after the ongoing sovereign debt crisis in Europe contributed to its failure to refinance a $1.1 billion credit facility.
The Bahrain-based investment conglomerate, which invests in private equity and real estate, filed voluntary cases for Chapter 11 bankruptcy protection with the US Bankruptcy Court for the Southern District of New York. The cases were filed with the aim of “developing and confirming a plan of reorganisation,” the firm said in a statement.
The filings automatically imposed a worldwide injunction against collection and enforcement actions that will protect the assets of the Arcapita entities while they form a reorganisation plan. None of Arcapita’s operating subsidiaries or portfolio companies are included in the filing.
According to the firm’s website, Arcapita has a $1.1 billion credit facility that comes due on 28 March. The firm began preparations to refinance that facility 18 months ago, but the Eurozone crisis disrupted those preparations.
Atif Abdulmalik, chief executive officer of Arcapita, said in a statement: “After plans to refinance a $1.1 billion financing facility coming due on 28 March were negatively impacted by the Eurozone crisis, Arcapita commenced discussions with the facility’s participants to extend it by three years.”
After it became clear that a consensual resolution would not be reached before the maturity date due to “the actions of certain non-bank creditors,” Arcapita felt that filing for bankruptcy protection would “offer the firm the necessary protection it needs to complete productive negotiations with all parties,” Abdulmalik explained.
Mohammed Abdulaziz Aljomaih, chairman of Arcapita’s board of directors, added: “After reviewing all the available options with management and its financial and legal advisors, the board has agreed that a filing of protection under Chapter 11 is not only a necessary step, but the best course of action to safeguard the interests of the bank’s stakeholders.” Arcapita’s legal advisors are Gibson Dunn & Crutcher and Linklaters, and its financial advisor is Rothschild.
The Chapter 11 protection allows the filing companies to continue to operate their businesses and manage their properties under the direction and control of their boards and management. Therefore, during the process, Arcapita’s management team will be able to conduct business in the ordinary course. All of the portfolio companies will continue to be managed by Arcapita, and decisions related to asset disposal also will remain with Arcapita. In addition, the firm will continue to manage approximately $7.4 billion in assets while engaging in discussions with its creditors and other stakeholders to develop an acceptable reorganisation plan.