%1

Saudi conglomerate Ahmad Hamad Algosaibi and Brothers (AHAB) said on Wednesday it had filed last week for a financial restructuring under Saudi Arabia’s new bankruptcy law, as it seeks to end a decade-long dispute with creditors, Reuters reported. Saudi Arabia’s bankruptcy law, which came into effect in August, is an important step towards making the kingdom more investor friendly, offering a legal framework to struggling companies seeking to restructure debt following the 2009 global financial crisis and, more recently, weaker oil prices. Creditors have been pursuing AHAB and Saad Group, another Saudi conglomerate, since they defaulted on about $22 billion in combined debt in 2009. Before the introduction of the law, modern bankruptcy legislation did not exist in Saudi Arabia, meaning the main options for defaults were liquidation or cash injections. AHAB’s earlier application for a “protective settlement procedure,” the first by a high-profile company under the new law, was rejected by a commercial court in Dammam which said it had not provided all the required details.

Venezuela’s U.S.-backed opposition leaders asked a federal appeals court to refrain from carving up the country’s foreign assets, saying their loss would hurt the chances of political change in Caracas, WSJ Pro Bankruptcy reported. The opposition’s parallel government filed papers Friday urging the U.S. Court of Appeals in Philadelphia to support the Trump administration’s push for regime change in Venezuela by pausing a $1.4 billion debt-collection lawsuit. The request underscores how the efforts of Venezuela’s many creditors to get repaid are now caught up in the country’s political crisis and the U.S. support for opposition leader Juan Guaidó, who re-entered the South American country yesterday under threat of arrest. With U.S. assistance, Guaidó has asserted control over Venezuelan assets abroad, including the country’s prized U.S. refining subsidiary, Citgo Petroleum Corp., a critical piece in the production chain at state oil giant Petróleos de Venezuela SA. Citgo is a pawn in the standoff between Washington and Caracas after the Trump administration imposed sanctions on owner PdVSA that are designed to cut off the primary source of petrodollars that keep embattled leftist President Nicolás Maduro in power. However, Washington, D.C., has allowed Citgo to find substitute crude suppliers and remain in business, because it is eager to protect the company’s thousands of U.S. jobs.

Half of European Union countries are experiencing economic imbalances that differ widely, the EU Commission said yesterday, as the bloc discusses how to improve convergence among its 27 members after Britain leaves, Reuters reported. In a regular check-up of EU governments’ economic policies and achievements, the Commission renewed its warning that gaps that are harmful to the whole bloc not being addressed in several states, while a growing number of them face shortfalls. As economic growth slows, “challenges vary significantly across countries and call for appropriate and determined policy action,” the Commission said in its report. Thirteen states were rebuked for their economic imbalances, two more than in last year’s assessment. Of them, Italy, Greece and Cyprus were found to have “excessive” shortfalls which would require swift corrective action. The Commission was mostly worried by the high ratio of bad loans in their banking sectors and their large public and private debt. Read more. 

Get a primer on the framework of the European Insolvency Regulation Recast (adopted in June 2017), review its major rules, get highlight pf the differences from the old EIR 2000, and gain insight into the most important and recent cases of the Court of Justice of the European Union. Pick up your copy of ABI's European Union Regulation on Insolvency Proceedings: An Introductory Analysis (Fourth Edition) today! 

Venezuela’s Citgo Petroleum Corp. is at risk of having the due date moved up to pay off billions of dollars in debt, according to a Fitch Ratings report, WSJ Pro Bankruptcy reported. The state-owned, U.S.-based crude refiner could experience a change in control that brings forward the due date on billions of dollars in debt, Fitch said in a Monday report that put Citgo’s credit ratings on negative watch. Fitch’s negative watch covers a $900 million revolving credit line that comes due in July plus another $1.9 billion in bonds that mature in February 2020. Citgo is caught up in the political crisis rocking Venezuela, with two parallel governments laying claim to the company. Venezuela’s foreign creditors are also watching the refiner, eager to seize its valuable Gulf Coast refineries to collect on billions of dollars in debt incurred under the country’s ruling leftist regime. A change in ownership would mean acceleration of the company’s bonds and loans and a forced refinancing of the debt stack in a tough borrowing environment, according to Fitch.

The leadership crisis in Venezuela could lead to an odd legal situation in the U.S. — a Delaware judge may be asked to decide who is the legitimate president of the South American country, according to a Bloomberg commentary. The issue could arise in the U.S. because of the power struggle over Citgo Petroleum Corp., the Houston-based refiner owned by Venezuela oil giant Petroleos de Venezuela SA. Last week, Juan Guaido, the U.S.-backed head of Venezuela’s National Assembly, named new directors to Citgo and PDVSA, a critical part of his strategy to seize oil assets and oust the regime headed by autocrat Nicolas Maduro, who remains in control of the military and other key parts of the government. While the old directors remain in place, at least on paper, Citgo’s new board is certainly acting as the legitimate one. It met on Thursday in a formal session and is expected to name a new chief executive officer. If, as is likely, Maduro challenges those moves, the legal questions would move to the U.S., where Citgo owns three refineries and more than 40 terminals. Central to the issue is who is the true president of Venezuela — Maduro or Guaido — as seen by U.S. courts. PDVSA is state-owned and Citgo is its largest asset, sending much-needed cash back to Caracas before U.S. sanctions kicked in. Citgo’s parent, PDV Holding Inc., is incorporated in Delaware. Under Delaware law, Citgo is controlled by the refiner’s current board, which was appointed by Maduro. To have Delaware recognize Guaido’s new board members, his lawyers must deliver to Citgo’s registered agent what’s known as a corporate consent. It would formally add his board nominees and remove Maduro’s. And it would be issued by Guaido under the claim that he is Venezuela’s legitimate leader. That’s the key. The president of Venezuela is the controlling shareholder of PDVSA and PDV Holding. Delaware law gives controlling shareholders wide latitude in deciding who occupies board seats and managerial positions.

A court-appointed investigator said he has found evidence that Samuels Jewelers, a century-old U.S. retail chain that filed for bankruptcy last year, laundered money as part of an alleged $2 billion fraud on India’s Punjab National Bank, WSJ Pro Bankruptcy reported. The investigator, John Carney, was appointed by a judge last year to look into the U.S. end of an alleged international fraud that ran for years across the U.S., India, Hong Kong and the United Arab Emirates. His probe of Samuels homed in on a complex in Austin, Texas, where a collection of businesses controlled by Mehul Choksi shuffled tens of millions of dollars in cash and diamonds around, creating the illusion of deals with outside companies, the report said. Choksi, chairman of the company that owns Samuels, is wanted by Indian authorities and contact information for him isn’t available.