Kuwait's Public Institution for Social Security is pressing ahead with liquidation proceedings in the Cayman Islands against Abraaj Group Ltd. unit Abraaj Holdings, in a move that would thwart the Dubai-based private equity firm's plan for a restructuring, the Financial Times reported.
The institution posted a notice in Abu Dhabi newspaper The National for a June 29 hearing, the FT noted, adding that the pension fund had also requested that FTI Consulting be appointed joint official liquidators.
The Kuwaiti pension fund had said Abraaj is "substantially insolvent" and unable to repay a $100 million loan due June 3 and $7 million in interests. Abraaj reportedly met with creditors earlier in the week of June 4 to avoid the liquidation proceedings and to go over a restructuring proposal for its debts totaling $1 billion.
The liquidation proceedings could hamper the potential sale of Abraaj's asset management arm, for which Cerberus had already reportedly placed a $125 million bid, sources told Reuters. Abraaj has been preparing to apply for provisional liquidation, in which a court appoints a liquidator on a provisional basis before hearing or ruling on a petition to wind up a company, two sources told the newswire.
Abraaj said it is aware of the proceedings in the Cayman Islands filed by a single creditor and continues "to engage closely with them to reach a consensual outcome for the benefit of all parties." The firm's secured creditors have hinted on agreeing to refrain from taking action against the default but the Public Institution for Social Security opted out, the FT wrote.
The Dubai company has been facing controversy lately after some investors questioned its handling of a $1 billion healthcare fund.