LDN - Business

A Saudi family feud, a decade-long debt saga and a court's $14 billion decision

[January 07, 2020] By Davide Barbuscia

DUBAI (Reuters) - Saudi Arabia's largest and longest debt saga, fueled by a feud that has split one of its richest families, could be nearing a resolution after a court approved about $14 billion in claims related to the collapse of two business empires a decade ago.

The Saudi court has accepted more than $7 billion in claims from creditors against the Algosaibi family's conglomerate AHAB, and about $6.5 billion against tycoon Maan al-Sanea and his company Saad Group, two court documents seen by Reuters showed.

The Algosaibis and Sanea - who married into the Algosaibi family - have been locked into a bitter dispute over who was to blame for the 2009 collapse of the companies.

Both sides deny wrongdoing, but the demise of the two companies nonetheless left dozens of local and international banks with billions of dollars of unpaid debt.

A court-driven end to the saga would not only offer some relief to those creditors, but more broadly would be an important sign to international investors, as the cases would be resolved under a new bankruptcy law introduced in 2018 as part of reforms aimed at making the kingdom more investor friendly.

The Dammam Commercial Court last week approved more than $7 billion of claims against AHAB (Ahmad Hamad Algosaibi and Bros.) out of nearly $12 billion in total claims listed, according to one of the documents seen by Reuters.

In December the court approved around $6.5 billion of claims against Sanea and Saad out of nearly $18 billion of listed claims, excluding those filed by the group's employees, according to a separate document.

Simon Charlton, chief restructuring officer at AHAB, confirmed the approval of the claims against the company.

"The trustee has requested the court for permission to form a creditors committee and we hope that we can get a committee formed quickly and then finalize a proposal with a target to get a creditor vote on a proposal that can be presented to the court for ratification within 90 days," he told Reuters.

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A man looks at vehicles belonging to billionaire Maan al-Sanea and his company as they are auctioned by Saudi authorities in Dammam, Saudi Arabia March 18, 2018. REUTERS/Zuhair Al-Traifi/File Photo

A legal representative for Saad Group and Sanea did not immediately respond to a request for comment. The Saudi government's media office also did not immediately respond.

The approved creditors' demands will now be included in restructuring proposals which the debtors and representatives of their respective lenders will submit to the court.

The court approved claims from over 70 financial institutions in the AHAB case, including Saudi and regional banks, and international lenders such as BNP Paribas, Deutsche Bank, HSBC and JPMorgan, the document showed.

But it rejected two of four claims by The International Bank Corporation (TIBC), a Bahraini bank which has around $3 billion in claims against AHAB. The bank had raised money in international markets, transferring the funds to AHAB.

Some $1.8 billion worth of TIBC claims were approved out of the $3 billion, according to the court document.

A spokesman for the administrators of TIBC, whose default in 2009 was at the center of Saudi Arabia's financial meltdown that year, said they planned to appeal against the court's rejection of two of its claims "as they represent claims that are no less worthy than the other two".

($1 = 3.7510 riyals)

(Reporting by Davide Barbuscia; Editing by Pravin Char)

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