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Abraaj files for court-supervised restructuring as it battles creditors

Africa Global Funds
June 14, 2018, 11:13 a.m.
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The Board of Abraaj Holdings has filed an application in the Grand Court of the Cayman Islands for a court-supervised restructuring as it battles allegations of misused funds.

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The Board of Abraaj Holdings has filed an application in the Grand Court of the Cayman Islands for a court-supervised restructuring as it battles allegations of misused funds.

The Company is seeking the appointment of Simon Conway of PwC Corporate Finance and Recovery (Cayman) and Michael Jervis and Mo Farzadi of PricewaterhouseCoopers, as joint provisional liquidators (JPLs). 

The Company has made this application so that the rights of all stakeholders can be protected while the Company and the JPLs promote a consensual restructuring of the Company's obligations.

The appointment of provisional liquidators imposes a moratorium on the enforcement of all unsecured claims against the Company, allowing time for a proposal to be put to creditors for the orderly restructuring of the Company. 

The buyout firm has filed its application in the Cayman Islands, being the jurisdiction of incorporation for it and many of its subsidiaries and affiliates.

The application has been made with the support of, amongst others, the Company’s secured creditors who have reiterated their desire for provisional liquidators to be appointed to work alongside the Company to formulate and implement a restructuring of the Company’s liabilities which is in the best interests of all the Company’s creditors.

Arif Naqvi, Founder, The Abraaj Group, said: “Keeping the interests of the Limited Partners in the Funds managed by Abraaj Investment Management Limited (AIML) during this turbulent period has been paramount. The fact that the approximately 50 companies in the current generation of Funds have kept growing during these recent turbulent months demonstrates the resilience and quality of their management teams and our investment professionals.” 

“Regardless of their future ownership, we are confident that the Funds will achieve above-market returns in the years to come. The provisional liquidation of Abraaj Holdings will create a more controlled basis for moving forward, without impacting the day to day management of the Funds and the underlying portfolio businesses. An independent AIML, under new ownership, will be stabilizing for all who are associated with the asset management business,” he said.

A review of Abraaj’s finances found that there was commingling of Abraaj’s own money in the healthcare fund and its fourth private equity fund, according to a summary of a report by Deloitte that was presented to creditors on June 4.

According to Naqvi, the process of court supervised restructuring will take a few months. 

“I will continue to support this orderly process and help ensure the best possible outcomes for all the stakeholders,” he said.

Sean M. Cleary, Chairman of the Board of Abraaj Holdings, added: “This is a defining moment for everyone associated with Abraaj. I want to thank all those who have contributed to building this remarkable firm, and especially the teams that have worked extraordinary hours in dealing with painful challenges over the past five months. Under the auspices of the Court, the situation has now been stabilized, and we can move forward to meet the firm’s commitments and restore confidence in the platform.”

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