The successful restructure of Bahrain-based investment company
Arcapita has raised questions about how other non-US companies
can take advantage of Chapter 11 of the US Bankruptcy Code.
provides a clear roadmap for recovery
Arcapita is a vanguard case for the Middle East, with
analysts saying that it represents the first true
post-financial-crisis debt restructuring by a GCC company.
While previous debt workouts in the region have typically seen
companies renegotiate terms on their debt, Arcapita's
bankruptcy plan provides a clear roadmap for recovery.
Key issues raised following the restructure are the
availability of Chapter 11 for entities with a limited nexus to
the US, breadth of the automatic stay and its effectiveness in
holding off creditors, and the power of debtor-in-possession
(DIP) facilities to create liquidity.
"In particular, companies have been asking if Chapter 11
proceedings help a debtor to survive and rehabilitate itself,
but almost inevitably results...