DUBAI/RIYADH: Saudi conglomerate Ahmad Hamad Algosaibi and Brothers (AHAB) said on Wednesday it had filed last week for a financial restructuring under Saudi Arabia's new bankruptcy law, as it seeks to end a decade-long dispute with creditors.

Saudi Arabia's bankruptcy law, which came into effect in August, is an important step towards making the kingdom more investor friendly, offering a legal framework to struggling companies seeking to restructure debt following the 2009 global financial crisis and, more recently, weaker oil prices.

Creditors have been pursuing AHAB and Saad Group, another Saudi conglomerate, since they defaulted on about $22 billion in combined debt in 2009.

Before the introduction of the law, modern bankruptcy legislation did not exist in Saudi Arabia, meaning the main options for defaults were liquidation or cash injections.

AHAB's earlier application for a "protective settlement procedure", the first by a high-profile company under the new law, was rejected by a commercial court in Dammam which said it had not provided all the required details.

Simon Charlton, AHAB's chief restructuring officer, said that the company has appealed against that rejection and is waiting to hear from the court, but it had in the meantime decided to file a petition for financial restructuring.

"AHAB thinks it is in the best interest of its creditors and the AHAB partners that this matter gets resolved properly under the new bankruptcy law rather than be dealt with through the enforcement court and therefore has decided to file this petition," Charlton told Reuters.

The commercial court in Dammam last month approved an application from indebted billionaire Maan al-Sanea and Saad, after they filed for a financial reorganisation. urn:newsml:reuters.com:*:nL8N20X036

Charlton said AHAB's application for a financial restructuring is more likely to be accepted because it does not require classification of creditors or a settlement proposal.

Government efforts to disentangle the AHAB and Saad debt disputes have intensified since 2016, when it formed a three-judge Joint Directorate of Enforcement at the General Court in Al Khobar (JDEK). The court has handled creditor claims against AHAB and began a liquidation process for Saad Group.

AHAB has been trying to move the jurisdiction of its case from the JDEK to the Commercial Court in Dammam, under the bankruptcy law, to avoid the risk of a disorganised liquidation.

(Reporting by Davide Barbuscia and Marwa Rashad, Editing by Alexander Smith) ((Davide.Barbuscia@thomsonreuters.com; +971522604297; Reuters Messaging: davide.barbuscia.reuters.com@reuters.net))