THE ARCAPITA GROUP BANKRUPTCY: A RESTRUCTURING CASE STUDY (ISRA-TR REPORT 2016)

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Year: 2016


Arcapita Bank (“Arcapita”) and its Debtor and non-Debtor afflliates (the “Group”) suffered an inability to obtain liquidity as a result of the 2007 global economic downturn and debt crisis. This affected the Group’s ability to refinance a US$1.02 billion syndicated murabahah facility that was due on March 28, 2012 (the “Syndicated Facility”). Attempts to arrange an out-of-court restructuring were unsuccessful, as were efforts to dispose of properties and reduce costs. A minority of the Syndicated Facility providers had also declined to approve the restructuring and demanded payoffs at par, threatening precipitous actions in various jurisdictions.

This article summarizes the comprehensive reorganization that was effected pursuant to a plan of reorganization for the Debtors that was approved by the Bankruptcy Court (the “Plan”). The format of this article is issue-oriented. It progresses from the initial issues faced by an insolvent Debtor group through the financial restructuring process. This reorganization case study is illustrative of the issues faced by complex international financial organizations in insolvency situations. It is helpful to identify some of these issues at the outset and to ask how these matters are addressed through the course of the restructuring.

 

Source:

ISRA THOMSON REUTERS ISLAMIC COMMERCIAL LAW REPORT 2016 (Pg 137 - 142) 


 

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