Saudi court approves detained tycoon Sanea’s bankruptcy filing

Published March 10, 2019
The ruling can provide a resolution to one of the kingdom’s longest-running debt sagas.— AP/File
The ruling can provide a resolution to one of the kingdom’s longest-running debt sagas.— AP/File

DUBAI: A Saudi court has approved an application by detained and indebted billionaire Maan al-Sanea and his company, Saad, to have their case resolved through the kingdom’s new bankruptcy law, the company’s financial adviser and two sources familiar with the matter said.

The ruling in February could provide a resolution to one of the kingdom’s longest-running debt sagas.

Saad, with interests from banking to healthcare, defaulted together with another conglomerate, Ahmad Hamad al-Gosaibi and Brothers (AHAB), in 2009, leaving banks with unpaid debts of about $22 billion Creditors have spent the past 10 years pursuing Saad, which is based in the city of Khobar in Saudi Arabia’s Eastern Province, for claims that some observers familiar with the case last year estimated at between $11 billion and $16 billion.

“This is a landmark step for all stakeholders since 2009,” said Ahmed Ismail, the chief executive of Reemas Consultants, which was appointed as Saad’s financial adviser in late 2017 to find a settlement with creditors.

“The regional and international creditors represent more than 85 per cent of total debt, some of whom advised filing under the new bankruptcy law,” he said.

“Given that it is more or less aligned with regional and international commercial law practices, the probability of its success is much higher.” A commercial court in Dammam last month approved an application for financial reorganisation under the terms of the Saudi bankruptcy law and appointed an independent trustee to oversee the process. Such decisions are not made public.

The trustee, Saleh A. Al-Naim, sent a notice to creditors, announcing the beginning of the financial reorganisation proceedings, and asked them to submit their claims within 90 days.

Saad’s filing is among the first to be accepted under Saudi Arabia’s bankruptcy law, which came into effect last August and is part of the Saudi government’s efforts to make the Arab world’s largest economy more attractive to investors.

Until last year the main options for debt defaults were liquidation or cash injections. The law provides more options and regulates procedures such as settlements and liquidation.

Sanea, ranked by Forbes in 2007 as one of the world’s 100 richest people, was detained in Khobar in 2017 for unpaid debts dating back to 2009 when Saad Group defaulted.

In late 2017 a three-judge tribunal established to resolve Saad’s debt dispute appointed a consortium called Etqaan Alliance to liquidate assets owned by the billionaire by auctions in Saudi Arabia’s Eastern Province, Riyadh and Jeddah.

Etqaan Alliance has already held three auctions for Sanea’s vehicles, warehouses and real estate assets. Sources said last month the auctions raised around 350 million riyals ($93.34 million).

“In addition to strengthening investors’ confidence with the local market, the new law will raise the value of the debtors’ assets, since they will not be obliged to sell for low prices through an enforced liquidation,” Ismail said.

“The realised value of the last three auctions was at 30 percent of market value in a normal buyer-and-seller market, which would have significantly jeopardised the recovery ratio for all creditors.”

Published in Dawn, March 10th, 2019

Opinion

Editorial

No end to hostility
Updated 17 Aug, 2022

No end to hostility

It is time for all parties to rise above petty tactics and hostilities for political gains and pull country back from brink.
Deadly accidents
17 Aug, 2022

Deadly accidents

TWO horrific accidents on Tuesday, which resulted in high death tolls, illustrate the dangers people face while ...
New banknote
17 Aug, 2022

New banknote

PAKISTAN has a new currency note to mark the diamond jubilee of independence. The 75-rupee banknote, issued by the...
Shared goals
Updated 16 Aug, 2022

Shared goals

It is high time that all parties realise that negotiation on the economy does not need to be held hostage to political rivalries.
Making amends?
16 Aug, 2022

Making amends?

WHERE relations with the US are concerned, there has been a distinct shift in Imran Khan’s tone. While the PTI...
Hazardous celebration
16 Aug, 2022

Hazardous celebration

CAN celebratory actions that often result in death or lifelong injuries really be described as such? Be it Eid, New...