Green light for Arcapita’s Shariah bankruptcy plan in US

http://www.chdcnr.org/docs/pay-to-make-essay.php pay to make essay

custom writting services

According to Reuters, Arcapita will transfer its assets to a new holding company which will dispose of its investments over time, in an attempt to avoid a firesale liquidation.

The company’s unsecured creditors will receive the equity in the new holding company as well as their pro rata share in a sharia-compliant loan. General unsecured creditors are expected to receive around 7.7 percent of the $1.9 billion they are owed, according to court documents.

The largest unsecured creditor is the Central Bank of Bahrain, which was owed $255.1 million.

The company provided alternative investment opportunities for rich families, institutions and sovereign wealth funds in the Gulf region, but sought bankruptcy last year as a $1.1 billion loan came due.

The fund’s investment were sharia-compliant, as is the $350 million loan that Arcapita arranged to fund its wind-down operations after its exits bankruptcy.

Sharia prohibits borrowing money with interest. Instead, the so-called murabahah structure effectively treats the arrangement as a sale, incorporating a profit margin and fees instead of interest.

Arcapita filed for bankruptcy protection in March 2012 with about $7.4 billion in assets under management.

The move was unprecedented in a region where most debt workouts have involved consensual talks that ended in long maturity extensions


Leave a Reply