Saudi Arabia’s longest debt dispute has ended with the issuance of a final court order to restructure the Ahmad Hamad Algosaibi & Brothers family conglomerate, or Ahab.
The commercial court in Dammam issued the unappealable order on Sunday, which is expected to return 26 cents in the dollar on debts of SR27.5bn ($7.3bn) that were left outstanding when the company went bankrupt in 2009.
“It has been a very long, costly and painful process especially for the Algosaibi family,” said Simon Charlton, Ahab’s chief restructuring officer. “The issuance of the final ratified order approving the settlement marks an end to one of the largest [and] longest-running disputes in the region.”
Under the settlement, Ahab will hand over more than 90 per cent of its assets, including shares and real estate valued at about SR5.2bn, to be sold to pay back creditors. The company’s 19 partners — members of the al-Gosaibi family — will contribute SR2bn and retain most of the operating businesses, including a shipping company, a mall and a hotel.
Ahab will now work with the authorities to lift restrictions over assets and liquidate them to provide proceeds for creditors. Charlton said he hoped “significant distributions” could be made by the end of 2021.
The 12-year global saga pitted Ahab, one of the kingdom’s most prominent merchant families, against Maan al-Sanea, a relative by marriage, who owned Saad Group.
The collapse of the Ahab and Saad groups in 2009 — the biggest regional victims of the global financial crisis — raised concerns about corporate governance in the Middle East and the prevalence of “name lending”, the ability of opaque businesses to raise vast loans using their reputation.
Creditors, including Saudi, regional and international banks, have been chasing debt claims of more than $32bn from both companies in court cases around the world, where both sides accused the other of fraud.
In 2018, a Cayman Islands court found Ahab and Saad to be complicit in a $126bn fraud described as one of the “largest Ponzi schemes in history”.
Charlton said Ahab appealed the judgment at hearings in May and June 2019, but no decision has been issued.
Ahab and Cayman-based Saad Investment, a linked but separate entity, have since settled claims against each other to allow both to make distributions to creditors, he added. Ahab continues to pursue claims against Saudi-based Saad Trading.
The court started the restructuring process in May 2019, using a new bankruptcy law of 2018 that sought to modernise the operating environment and ensure fair treatment for creditors.
“This has been a difficult learning process for all and has seen a real evolution in the Saudi legal system culminating in the new bankruptcy law,” said Charlton.
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