After being implicated in one of the greatest defaults on the side of Ahmed Hamad Al-Gosaibi & Brothers Group, also known as “Al-Gosaibi,” major banks such as BNP Paribas and Citigroup are now prepared to collect some of their debts, at least in part.
The Ahmed Hamad Al-Gosaibi & Brothers Group, which has been fighting creditors over $7.5 billion in debt since 2009, has filed a proposal to restructure liabilities that have been granted by a Saudi court, marking the first significant test of the kingdom’s new bankruptcy legislation.
The Commercial Court in Dammam (east Saudi Arabia) has granted an order allowing the group to continue through with a proposal to settle roughly 26% of creditors’ debts in cash, shares, and Saudi real estate.
The long-term debt tale of Al-Gosaibi Group aims to attract additional foreign investment to assist support a plan to diversify the economy.
More than 100 local and foreign banks, hedge funds, and other creditors filed claims in 2020, and the court authorized them.
Algosaibi, who formerly worked in the building, shipping, and hotel industries, became embroiled in a global legal battle with Maan Al-Sanea, a Saudi businessman who married into the Algosaibi family and handled the family’s financial affairs.
Algosaibi Group was able to negotiate a debt settlement deal thanks to the bankruptcy law, which took effect in 2018.
In a statement to “Bloomberg,” Samah Al-Gosaibi, a member of the company’s board of directors, claimed that the bankruptcy legislation “had the biggest influence that made this outcome feasible, and led to the payment of all the company’s obligations.”
Previous efforts at a restructuring arrangement have been blocked by some creditors, preventing any accord from moving forward even if the majority of creditors approve. Finally, 98 percent of the company’s creditors by value agreed to the debt restructuring plan.
Algosaibi will provide 90% of its assets to pay off debts and restructure the company so that it can continue to operate.
The initial payments to creditors will be in the amount of around 4.5 billion riyals ($ 1.2 billion), which will be paid in cash and shares owned by the firm by the end of 2021.
Following that, the firm plans to sell one of its enterprises and form a real estate fund to handle roughly 2.5 billion riyals in assets.