DUBAI/RIYADH - A commercial court in Dammam has rejected an application by the conglomerate Ahmad Hamad Algosaibi and Brothers (AHAB) to settle its debt under a new Saudi bankruptcy law, AHAB told Reuters on Wednesday.
AHAB was the first high-profile company to file for a settlement under Saudi Arabia’s bankruptcy law, which came into effect in August last year, part of reforms aimed at attracting foreign investment and reducing the economy’s dependence on oil.
It hoped that the filing would help to bring to a conclusion creditor talks that have rumbled on since AHAB and Saad Group, another Saudi conglomerate, defaulted on about $22 billion of debt in 2009.
In a hearing on Jan. 21 the Dammam court rejected the application to begin a “protective settlement procedure”, saying the company had not provided all the information needed as part of the bankruptcy law and its regulations.
The judgment, however, said AHAB could still apply for a bankruptcy procedure after completing all the legal requirements.
On Feb. 3 AHAB filed additional information with the commercial court of appeal at Dammam’s commercial court, effectively appealing against its decision.
The company hopes to receive a response within the next two weeks, said Simon Charlton, chief restructuring officer at AHAB.
“Failing to complete a settlement in a fair manner will be harmful to the interests of the vast majority of the creditors who wish to reach an agreement,” Charlton said.
The protective settlement procedure is a mechanism similar to Chapter 11 proceedings in the United States, which offers a so-called cram-down provision to prevent minority dissenting creditors from blocking a settlement agreed by the majority. (Editing by Jan Harvey)
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