Dubai-based Abraaj Group Ltd. is facing another legal action as a second creditor has sought for the restructuring of its liabilities, Reuters reported.
Auctus Fund Ltd. is seeking the appointment of "court-approved professionals in the Cayman Islands," where Abraaj is registered, to manage the restructuring process, the creditor said through its legal representative Kobre & Kim. The investor reportedly said it holds a large credit position in the embattled private equity firm and its investment arm Abraaj Investment Management Ltd.
This comes after people with knowledge of the matter told Bloomberg News that Abraaj intends to file for provisional liquidation ahead of a June 29 hearing for a liquidation petition filed by Kuwait's Public Institution for Social Security, or PIFSS. The move would allow Abraaj to restructure debt, negotiate with creditors and offload assets and would pave the way for a moratorium on the holding company's unsecured claims, according to the report.
Auctus Fund reportedly wants an orderly restructuring "in order to avoid value destruction that would likely occur in the kind of process sought by PIFSS."
PIFSS had said Abraaj is "substantially insolvent" and unable to repay a $100 million loan due June 3 and $7 million in interests. PIFSS has reportedly provided $731.8 million of loans and investments to Abraaj by 2013 and has since only gotten back $346.2 million.
The firm has been embroiled in controversies in recent months after investors questioned its handling of a $1 billion healthcare fund. It has reportedly been selling assets to raise liquidity, and it is also in talks to sell its asset management business, for which Cerberus Capital Management LP had placed a $125 million offer.