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Dubai-based PE firm Abraaj files for provisional liquidation in Cayman Islands

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Dubai-based PE firm Abraaj files for provisional liquidation in Cayman Islands

Abraaj Group Ltd. unit Abraaj Holdings filed for provisional liquidation in the Cayman Islands, where it is registered, in a move that could avert a petition for liquidation filed by one of its creditors.

The embattled private equity firm sought the appointment of Simon Conway of PwC Corporate Finance and Recovery (Cayman) Ltd. and Michael Jervis and Mo Farzadi of PricewaterhouseCoopers as joint provisional liquidators. Their appointment "imposes a moratorium on the enforcement of all unsecured claims against the company, allowing time for a proposal to be put to creditors for the orderly restructuring of the company," Abraaj said June 14.

Abraaj's application comes ahead of a June 29 hearing for the liquidation petition filed by Kuwait's Public Institution for Social Security, or PIFSS, which had said the firm is "substantially insolvent" and unable to repay a $100 million loan due June 3 and $7 million in interest. The firm's secured creditors have hinted at agreeing to refrain from taking action against the default but PIFSS reportedly opted out.

Auctus Fund Ltd., another Abraaj creditor, meanwhile asked for the appointment of "court-approved professionals in the Cayman Islands" to manage the restructuring of Abraaj's liabilities. The fund reportedly wants an orderly restructuring "in order to avoid value destruction that would likely occur in the kind of process sought by PIFSS."

Auctus also wants Abraaj Investment Management Ltd, a unit of Abraaj, to be liquidated in lieu of its failure to repay a $100 million loan issued by an Auctus predecessor in late 2017, Reuters reported June 14. Auctus claimed that two checks from Abraaj Investment Management that were meant to partially secure the debt bounced when they were presented for payment.

Abraaj founder Arif Naqvi said in the company's statement that the provisional liquidation of the parent company would allow for Abraaj Investment Management to go forward under new ownership and keep the funds it manages going.

Abraaj, the Middle East's largest private equity firm, has been facing a wave of controversies in recent months after investors questioned its handling of a $1 billion healthcare fund.

Allen & Overy LLP; Carey Olsen; and Milbank Tweed Hadley & McCloy LLP serve as legal advisers to Abraaj, while Houlihan Lokey serves as financial adviser.