Investment firm Arcapita Bank BSC filed a Chapter 11 petition for bankruptcy court protection in Manhattan on Monday.
Five affiliated debtors, including Arcapita Investment Holdings Ltd., also filed petitions for bankruptcy court protection. Arcapita has assets of $3.06 billion and liabilities of $2.55 billion.
The Central Bank of Bahrain, owed $225.1 million on a bank loan, is Arcapita’s largest unsecured creditor. Germany’s Commerzbank is the second-largest unsecured creditor at $164.7 million. Others owed money for loans include banks from Bahrain, Belgium, Cayman Islands, London, Saudi Arabia and the United Arab Emirates.
Arcapita was founded in 1996 as First Islamic Investment Bank, and is an Islamic wholesale bank owned by the Central Bank of Bahrain. Arcapita Inc., a U.S. subsidiary, was formerly known as Crescent Investments and invests in American firms for between $200 million and $1 billion. The investments are then sold on average five years later.
The Manama, Bahrain-based firm includes among its consumer-branded holdings women’s apparel retailer J. Jill and Bijoux Terner, an accessories retailer at airports, hotels and cruise ships. Former investments in the consumer sphere include Church’s Chicken, coffeehouse chain Caribou Coffee and women’s apparel off-price chain Loehmann’s. The debtor manages about $7.4 billion in assets, which include real estate holdings and firms in Europe and Asia, in addition to those in the U.S., according to court papers.
None of Arcapita’s operating subsidiaries nor its portfolio firms are parties to the filing.
In a statement filed with the bankruptcy court, Henry A. Thompson, executive director, head of legal, at Arcapita Bank, said, “Like virtually all private equity institutions and investment banks, the debtors have been adversely impacted by the global economic downturn, and have been especially hard hit by the recent debt crisis in the euro zone. This global recession has hampered the debtors’ ability to obtain liquidity from the capital markets, and has also resulted in a reduction in asset values...”
The company had been in talks with principal lenders to restructure a $1.1 billion debt that was due on March 28, but certain hedge funds who own the debt had blocked the discussions, according to court documents.
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