Arcapita Bank BSC, an Islamic- compliant fund manager, can extend control of its bankruptcy, a judge said, overruling objections from lenders.
U.S. Bankruptcy Judge Sean Lane approved the extension today in Manhattan. The company has until Dec. 14 to file a plan and until Feb. 12 to win creditors’ support.
A group of lenders owning $1.1 billion of Arcapita’s unsecured debt had objected to the extension in court papers, saying the company already has a plan that may lead to sales of investments with a liquidation value of $1.4 billion. Creditors had also objected, saying Arcapita is “languishing” in bankruptcy. They agreed not to oppose the request under a settlement.
The Manama, Bahrain-based company has a “toggle” plan under which it will either reorganize or “conduct an orderly monetization” of assets, depending on whether Arcapita raises more money by the time it seeks to confirm a plan in 2013, the lenders said in court papers.
Valuation reports by KPMG indicate that assets under management have a liquidation value of $1.4 billion, the lenders said. Arcapita investments include Irish power utility Viridian Group Ltd. and U.S.-based Falcon Gas Storage Co.
A committee of unsecured creditors said it wouldn’t oppose the extension of control as part of a settlement that requires Arcapita to have at least $250 million in new equity commitments by Nov. 1. If it doesn’t, the company must begin negotiating with creditors on a plan “contemplating an orderly wind-down,” the committee said.
“Our efforts with respect to new money continue,” Michael Rosenthal, a lawyer for Arcapita, told Lane in court today.
Arcapita separately adjourned its request to borrow $150 million from Silver Point Finance LLC and pay related fees and expenses.
“I have some grave concerns about what the estate is really getting,” Lane said. The language of the contract might allow Silver Point to back out of the agreement, he said.
Arcapita filed for Chapter 11 protection March 19 listing assets of $3.06 billion and liabilities of $2.55 billion. Arcapita Investment Holdings Ltd., already in U.S. bankruptcy, also has filed for bankruptcy in the Cayman Islands.
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