IslamicFinance.de

UAE-based Residential REIT has completed new property transactions worth AED772 million ($210.1 million). The deals were closed with Abu Dhabi Islamic Bank, Arcapita and an unnamed large Saudi institution. Abu Dhabi Islamic Bank has contributed 165 residential units located in three buildings in Marina Square on Al Reem Island in Abu Dhabi. Arcapita and the Saudi institution have contributed three buildings with a total of 285 residential units located in Saadiyat Beach Residences on Saadiyat Island in Abu Dhabi. Following the new acquisitions, the Residential REIT's portfolio includes a total of 1,069 units across Abu Dhabi, Ras Al Khaimah and Dubai.

The $1.6 billion restructuring of Bahrain-based Arcapita Bank B.S.C. has a significance that extends far beyond simply returning value to its creditors. Arcapita was established in 1996 as the world's first Islamic investment bank. This means it had to comply with principles set out by Islamic law. The Chapter 11 restructuring of Bahrain-based Arcapita Bank, led by Gibson Dunn, saw U.S. bankruptcy courts faced for the first time with the world of Shariah law.

Arcapita Bank is suing Saudi Arabia's Al Baraka Banking Group BSC and Bahrain-based Alubaf Arab International Bank to recover a total of $45.3 million the investment firm transferred to them just before its 2012 bankruptcy filing. Arcapita is suing two units of Al Baraka for a total of $35.3 million and is going after Alubaf for $10 million in a separate suit. The suits are the biggest of 59 lawsuits Arcapita has filed seeking money it shelled out within 90 days before its March 2012 bankruptcy filing. The rest of the suits are mostly against law firms, consulting groups and vendors such as information services the company paid for. Most of those are for $200,000 or less.

Arcapita Bank is suing two Arab banks to recover a total of $45.3 million the investment firm transferred to them just before its 2012 bankruptcy filing. The suits, filed by the Bahrain-based bank against Saudi Arabia's Al Baraka Banking Group BSC and Bahrain-based Alubaf Arab International Bank BSC, are the biggest of 59 lawsuits Arcapita filed on Monday seeking money it shelled out within 90 days before its March 2012 bankruptcy filing. Arcapita is suing two units of Al Baraka for a total of $35.3 million and is going after Alubaf for $10 million in a separate suit.

Members of Saudi Arabia's wealthy Baeshen family, who control one of the Middle East's leading tea purveyors, AMS Baeshen & Co., are suing the reorganized Bahraini private equity and investment firm Arcapita Bank for the return of millions of dollars they'd earmarked for the bank's aborted stock sale. Lawyers for the Baeshens, the family behind the Rabea Tea brand, are seeking the return of some $3.5 million deposited at the bank in connection with the Bahraini bank's abandoned rights offering.

Arcapita Bank announced the sale of 3PD Holding, Inc. (3PD), a last-mile logistics company in the United States and Canada, for $365m. 3PD was acquired by XPO Logistics Inc., a transportation logistics companies serving North America. Arcapita acquired a majority stake in 3PD in 2006 and afterwards provided investment capital to 3PD. Its portfolio managers worked closely with the founders and management of 3PD to develop and deliver a strategy that propelled the business to a market leadership position despite a weak economy. Profitability has since grown by over 70%. The sale of 3PD to XPO is considered to be strategically the right step in the business' development.

On March 19, 2012, certain Arcapita entities filed voluntary petitions under chapter 11 of the US Bankruptcy Code as a means to reorganise their business and restructure over US$2.5bn of indebtedness. Arcapita’s chapter 11 process is still
ongoing but is already creating a new landscape for Middle Eastern companies to consider when they face restructuring scenarios. Several key elements of Arcapita’s ongoing chapter 11 process demonstrate that a chapter 11 filing can
be an effective means of implementing a restructuring for a Middle East-based company, including procedures
to prevent enforcement action by creditors, maintain the debtor’s control over its own restructuring and obtain access to new financing needed to complete a restructuring.

A U.S. judge Tuesday approved Arcapita Bank B.S.C.'s plan to gradually liquidate itself in a process that conforms with Islamic Shariah law, which generally prohibits borrowing money with interest. The Bahrain-based investment firm entered bankruptcy protection last year with a goal of restructuring itself but ended up with a plan to orderly liquidate its private-equity investments. The modified proposal solved several concerns from creditors, including creating a new entity that will retain the firm’s management, and setting a minimum valuation for the company’s remaining assets. Arcapita manages infrastructure, real-estate, private-equity and venture-capital investments that are compliant with Shariah.

Arcapita Bank on Tuesday secured a New York bankruptcy judge’s approval of Chapter 11 reorganization plan, allowing it to exit bankruptcy, pay off its creditors and turn over its assets to a new entity that will manage and dispose of them over time. Sixteen months after it entered bankruptcy, the Bahraini investment bank sailed through a confirmation hearing before U.S. Bankruptcy Judge Sean H. Lane with substantial support from creditors and shareholders.

In a Tuesday filing with U.S. Bankruptcy Court in Manhattan, Arcapita's official committee of unsecured creditors said it wants to challenge three sets of claims that it says could unlock millions of dollars for creditors of the liquidating firm. The creditors think they can recover more than $33 million owed to Arcapita being held by three Bahrain banks and save Arcapita from $100 million in liabilities stemming from a 2011 transaction with its subsidiary Arcapita Investment Holdings that may have been insolvent. The creditors also think they can get $1.2 million more related to a "preference" claim, which typically refers to claims from the 90-day period before a company files for bankruptcy. In their filing, the creditors said they didn't think litigation would be overly expensive.

Tide Natural Gas Storage LP sued a former group of minority shareholders of Falcon Gas Storage Co., the bankrupt Arcapita subsidiary that sold natural-gas assets to Tide. The energy company says those shareholders' claims in Arcapita's bankruptcy shouldn't be paid before their own. The shareholders have been paid some of the money they were owed but are slated to receive an additional $8.25 million that lies in a $70 million account. The $70 million lies in an escrow account and stems from Tide's 2010 purchase of the natural-gas storage facilities from Falcon. Tide has been fighting for the money in U.S. District Court in Manhattan for two years. Arcapita has argued the $70 million claim by Tide should be subordinated to those of other creditors. The issue, Arcapita says, isn't whether the claim should be placed lower, but rather how much of it should be.

Goldman Sachs Group Inc. (GS), which is already providing Arcapita Bank $350 million in bankruptcy exit financing, is now seeking to give the Bahrain investment firm a $175 million bankruptcy loan that would pay off existing lender Fortress Investment Group LLC (FIG). Arcapita said the Goldman loan would pay off the $105 million still owed to Fortress and later convert into the $350 million exit loan that Goldman is already providing. With Arcapita obliged to pay off the Fortress loan by June 14, the company said it needs the Goldman loan approved at a hearing on June 10. Goldman, earlier this month, beat out Fortress in a war over who would provide the exit financing for Arcapita. Fortress's $150 million financing pact, arranged in December for Arcapita, was believed to be the first U.S. bankruptcy loan fully compliant with Islamic Sharia law.

Last week, Arcapita took on Tide Natural Gas Storage LP's contention that Arcapita's bankruptcy plan shouldn't be approved by a judge because of $70 million it says it is owed.The $70 million lies in an escrow account and stems from Tide's 2010 purchase of natural-gas storage facilities from an Arcapita subsidiary. Tide has been fighting for the money in U.S. district court in Manhattan for two years saying its claim to the $70 million shouldn't be placed behind the claims of other creditors. In its filing made last week, Arcapita says the $70 million claim by Tide should be subordinated to those of other creditors. The filing comes as Arcapita tries to finalize its exit from Chapter 11. Tide lawyers have said they will most likely fight the plan at a hearing next month.

Goldman Sachs International on Wednesday outbid Fortress Investment Group LLC to provide exit financing to Arcapita Bank BSC worth up to $350 million, money that will allow the Bahraini bank to meet outstanding obligations and work its way out of bankruptcy. U.S. Bankruptcy Judge Sean H. Lane noted that the bank was in the unusual position of having two institutions fighting over which would be able to provide the financing.

Arcapita Bank has lined up $350 million in financing to take it out of Chapter 11 protection this summer. The Bahraini investment firm is seeking bankruptcy-court approval to move forward with a deal under which Goldman Sachs International will arrange and syndicate up to $350 million in financing, which court papers show will be structured to be compliant with Islamic Sharia law.

Arcapita Bank yesterday announced that a US court has approved the disclosure statement for the amended Chapter 11 plan of reorganisation. The court's decision relates to the adequacy of the disclosures in the disclosure statement about the company and the plan, and the process for voting on it. In early May, the plan will be submitted to creditors for a vote, and following this, presented to the US court for confirmation. A hearing to confirm the plan has been scheduled before the US court for June 11. The provisions of Chapter 11 allow the filing companies to continue to operate their businesses and manage their properties under the direction and control of their boards and management.

Arcapita Bank and its debtor affiliates have filed a first amended joint plan of reorganisation and a related disclosure statement in their Voluntary Chapter 11 cases in the US. The agreements implemented by the plan allow for the orderly sale of the portfolio investments at a time and price that maximises recoveries for both Arcapita's creditors and its investors. The plan avoids expensive litigation and facilitates a prompt emergence from bankruptcy. A hearing on approval of the proposed disclosure statement related to the amended plan is scheduled before the US Court on April 26. A confirmation hearing date has not yet been scheduled.

Creditors of bankrupt Arcapita say the investment bank should not be allowed to foot the legal bills of lawyers from Linklaters and Freshfields who ran a failed initial public offering last year of Arcapita's real estate assets. Arcapita has so far paid $1.5 million in professional fees associated with the IPO, but last month submitted court papers looking to pay another $6.8 million to Linklaters, $1.1 million for Freshfields Bruckhaus Deringer, and $2.76 million to KPMG, which served as auditor on the IPO effort. However, Arcapita's creditors argue that the IPO's failure prevented anyone from benefiting from the professionals' work. A hearing on the matter, initially scheduled for March 18, was postponed until April 30.

Bahrain-based Arcapita Bank, the first Gulf company to file for bankruptcy in the United States under Chapter 11 rules, has submitted a plan to reorganise the company. The plan, filed with the court handling the chapter 11 case in New York, represents an effective way to implement a comprehensive restructuring and maximise recoveries to creditors and other stakeholders. It will be the subject of a hearing within 45 days and must then be approved by creditors.

Tide Natural Gas Storage I LP, which paid $515 million for natural gas assets from a subsidiary of Bahrain's bankrupt Arcapita Bank BSC, asked a New York bankruptcy court Monday to appoint a trustee of the subsidiary's bankruptcy because of conflicts of interest. Tide asked to convert Arcapita subsidiary Falcon Gas Storage Co. Inc.'s bankruptcy from Chapter 11 to Chapter 7 and for the court to appoint a trustee because Arcapita reorganization's plan will give the Bahraini bank and its creditors too much power.