We assisted our clients in resolving multiple challenges. After creditors threatened to begin bankruptcy proceedings in the Cayman Islands, we filed a U.S. Chapter 11 case on less than five days’ notice in early 2012, and an ancillary Cayman Islands proceeding. The filing was a highly unusual move for a company based in the Middle East, a region unaccustomed to such proceedings. We assembled a large multidisciplinary team and, among other things, began to carefully and steadily tackle cultural and communications hurdles to overcome resistance and garner creditor support for a Chapter 11 plan of reorganization.
To comply with its Shari’ah-compliant mandate, the Arcapita restructuring needed to be accomplished in a Shari’ah-compliant manner, something that had not before been done in a U.S. bankruptcy court. This required Shari’ah-compliant DIP and exit financing, and plan structuring. During the case, we also assisted Arcapita in resolving complex issues related to exits from minority investment positions, and in negotiating comprehensive intercreditor, co-investor and management agreements that facilitated maximization of the value of the Arcapita portfolio investments.
In addition to developing a U.S. Chapter 11 plan of reorganization that was overwhelmingly approved by Arcapita’s creditors, we structured an innovative mechanism to obtain approval of the plan transactions by the Grand Court of the Cayman Islands. Consummated in 18 months, the Arcapita Bank restructuring represents the first-ever Chapter 11 restructuring of a Shari’ah-compliant company and was awarded the 2014 Grand Prize for Global Finance Deal of the Year by The American Lawyer, and the Financial Times 2014 award for Innovation in Finance Law.