Arab Today, arab today bahrain\s arcapita wins permission to pay wages
Last Updated : GMT 12:34:44
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Bahrain\'s Arcapita wins permission to pay wages

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Arab Today, arab today Bahrain\'s Arcapita wins permission to pay wages

Manama - Arabstoday

Arcapita Bank, the Bahrain-based Islamic-compliant fund manager overseeing about $7bn in investments, has won permission to use cash within a budget and pay employees in bankruptcy. US Bankruptcy Judge Sean Lane in Manhattan today approved Arcapita’s requests on an interim basis to avoid “irreparable harm” to the company. Euroville Sarl, one of Arcapita’s largest creditors with $88.8m of a $1.1bn syndicated loan, objected that there wasn’t enough transparency about expenses. “What interim means is, what has to be paid. Now,” Lane said at a court hearing. He told a lawyer for Euroville that he would hear objections at a later date, after a creditors committee has been formed in the case. Arcapita, formerly known as First Islamic Investment Bank, filed for Chapter 11 on March 19 along with five affiliates. It was forced to seek bankruptcy after hedge funds, including Euroville, derailed restructuring talks on its $1.1bn loan due in March, attorney Michael Rosenthal told Lane on the company’s first day in bankruptcy. Rosenthal told Lane today that Arcapita owns 39 portfolio companies, all with their own credit facilities and investors. Some co-investors in those companies have tried to take advantage of Arcapita’s bankruptcy by claiming an event of default on the portfolio companies’ loans, or by trying to buy out Arcapita’s stakes at below-market rates, Rosenthal said. Arcapita, founded in 1996 and based in Manama, Bahrain, said it needed to pay its 191 employees and reimburse their expenses to continue operating. Gross monthly payroll is $1.18m and average monthly expenses are $308,000, Arcapita said. The company also won permission today to pay business partners it deemed “critical.” “The debtors’ public filings and the motions before the court provide scant justification for the debtors’ enormous operating expenses, lavish employee benefits and exorbitant rent obligations to an insider landlord,” Euroville said in court papers. Euroville said in its objection that on March 5, two weeks before the bankruptcy filing, Arcapita sold a real estate asset called Lusail to Qatar Islamic bank for less than half its book value of $317.4m. The company received money to keep operating that should go to repay creditors, Euroville said. Arcapita listed assets of $3.06bn and liabilities of $2.55bn in its Chapter 11 petition in Manhattan. Arcapita Investment Holdings, already in US bankruptcy, also has filed a bankruptcy in the Cayman Islands. The company’s investments include Irish power utility Viridian Group and US-based Falcon Gas Storage Co.

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