Awal Bank seeks US bankruptcy protection after Bahrain filing

Awal Bank, a Bahrain-based lender put under administration by Bahrain’s central bank in July, seeks protection from US court as it decides whether to liquidate or reorganise.

Awal listed more than $1 billion (Dh3.67bn) in assets and debts in the September 30 petition for Chapter 15 bankruptcy in Manhattan.

Under Bahrain law, Awal’s administrator, the UK-based law firm Charles Russell, has two years to decide if the bank should liquidate or be returned to management and shareholders, said lawyers from the bank’s US-based counsel, Quinn Emanuel Urquhart Oliver & Hedges.

The US bankruptcy will “safeguard the ability of the external administrator to treat all creditors equitably”, lawyers wrote.

Under Chapter 15 of the bankruptcy code, US lawsuits can be stayed and American creditors can be organised, helping a company with its main proceeding in a foreign court. Two weeks before its Bahrain filing, the bank was sued in New York Supreme Court by a partnership based in Saudi Arabia, according to court documents.

Awal’s assets were about $5.5bn against debts of $2.75bn as of July 31, according to an unaudited balance sheet, the company said in court documents. Claims worth $1.5bn already have been received.

The Manama-based investment bank mostly makes loans to other banks in the Middle East and Europe. Its three shareholders are prior Chairman Maan al-Sanea and two entities he owns, Saad Investments  and Saad Trading, Contracting and Financial Services Co, according to court documents.

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