TIBC administrator confident but doubts persist

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DOUBTS PERSIST: Administrators of Bahrain-based TIBC say they are confident of paying creditors; but doubts persist. (Getty Images)

Administrators of Bahrain-based The International Bank Corporation (TIBC) say they are confident they can repay creditors as doubts persist  whether there are enough assets to meet obligations.

TIBC, owned by Saudi group Ahmad Hamad Algosaibi & Bros (AHAB), plays a key role in the corporate debt defaults of AHAB and Saad Group, involving an estimated $22 billion in obligations.

The Central Bank of Bahrain (CBB) assumed control of TIBC and Saad Group's Bahrain-based Awal Bank in July and appointed external administrators to protect creditors' claims.

"The administrator of TIBC has already realized some of the bank's assets and met with creditors last week to present plans for a robust and comprehensive asset realization strategy," law firm Trowers & Hamlins said in a statement in response to questions submitted by Reuters.

"It is wrong to suggest that there are few assets left at TIBC, in fact there are a whole range of assets totaling almost $4 billion that the administrator is in the process of pursuing," the administrators said.

Under asset realization, administrators are trying to cash in assets whose valuation or legal status is unclear.

But creditors concluded at a recent meeting that prospects for the asset realization were low, a source familiar with the situation told Reuters.

"There's less than one percent of the liquid assets left," the source said.

The liquid assets on TIBC's balance sheet include a $437 million securities portfolio, the source said. TIBC also still has a loan book of about $2 billion in its books.

The source also said administrators were considering filing for Chapter 15 in the United States.

Under Chapter 15 of the US bankruptcy code, administrators of a foreign bankruptcy case can seek assistance from US courts.

Deutsche Bank and TIBC are battling in a New York court over TIBC's failure to make good on its portion of two foreign exchange transactions, under which the German bank agreed to swap $59.8 million for 40 million pounds ($66.60 million).

The source also said that creditors were told during the meeting they needed to inject extra funds into TIBC to cover the administrators' costs. (Reuters)

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