In March 2012, Bahrain-headquartered Arcapita Bank became the first company in the Gulf to file for Chapter 11 bankruptcy proceedings under US legislation. It was grappling with a $1.1bn debt obligation in the wake of the financial crisis and underwent 18 months of court-supervised restructuring in New York, where part of the company was based.
The rescue has been broadly hailed as a success. Just one year after emerging from the restructuring, Arcapita completed a $100m fundraising from Gulf shareholders, to make new investments in the region and beyond. It has since closed several deals, including the $200m acquisition of the first phase of Abu Dhabi’s Saadiyat Beach Residences last July, and the $85m purchase of senior living communities in Colorado last month.
Arcapita’s story is often used by lawyers and other parties lobbying Arab governments to introduce insolvency legislation similar to Chapter 11.
Arcapita chief executive and executive chairman Atif Abdulmalik, toldArabian Business in an interview last year: “The beauty about [Chapter 11] is it gives you enough time to restructure internally and is 100 percent controlled so there is no pressure to sell off your assets at a lower market price.”
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