New Saudi bankruptcy law may resolve $22 billion Saad debt saga

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Vehicles belonging to billionaire Maan al-Sanea and his company are auctioned off by Saudi authorities in Dammam, Saudi Arabia, on March 18, 2018. (REUTERS/Zuhair Al-Traifi/File Photo)
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Maan Al-Sanea
Updated 10 March 2019

New Saudi bankruptcy law may resolve $22 billion Saad debt saga

  • Saad Group, with interests from banking to health care, defaulted in 2009, leaving banks with unpaid debts of about $22 billion
  • Saudi Arabia’s bankruptcy law is part of the Saudi government’s efforts to make the economy more attractive to investors

ALKHOBAR, Saudi Arabia: A Saudi court has approved an application by billionaire Maan Al-Sanea and his company, Saad, to have their case resolved through the Kingdom’s new bankruptcy law.

The ruling could provide a resolution to one of Saudi Arabia’s longest-running debt sagas.

Saad, with interests from banking to health care, defaulted together with another conglomerate, Ahmad Hamad Al-Gosaibi and Brothers, in 2009, leaving banks with unpaid debts of about $22 billion.

Creditors have spent the past 10 years pursuing Saad, which is based in Alkhobar, for claims estimated at between $11 billion and $16 billion.

“This is a landmark step for all stakeholders since 2009,” said Ahmed Ismail, chief executive of Reemas Consultants, which was appointed as Saad’s financial adviser in late 2017 to find a settlement with creditors.

“The regional and international creditors represent more than 85 percent of total debt, some of whom advised filing under the new bankruptcy law. Given that it is more or less aligned with regional and international commercial law practices, the probability of its success is much higher.”

The commercial court in Dammam last month approved an application for financial reorganisation under the terms of the Saudi bankruptcy law and appointed an independent trustee to oversee the process. 

The trustee, Saleh Al-Naim, sent a notice to creditors announcing the beginning of the financial reorganisation proceedings, and asked them to submit their claims within 90 days.

Saad’s filing is among the first to be accepted under Saudi Arabia’s bankruptcy law, which came into effect last August and is part of the Saudi government’s efforts to make the economy more attractive to investors.

Until last year the main options for debt defaults were liquidation or cash injections. The law provides more options and regulates procedures such as settlements and liquidation.


Fraud alert over cryptocurrency falsely linked to Saudi Arabia

Updated 21 August 2019

Fraud alert over cryptocurrency falsely linked to Saudi Arabia

  • The website of a cryptocurrency company is promoting what it calls the CryptoRiyal and SmartRiyal
  • The Singapore-based company uses the Saudi emblem of two crossed swords and a palm tree

JEDDAH: Fraudsters are trying to lure victims into investing in a “virtual currency” with false claims that it is linked to the Saudi riyal and will be used to finance key projects, the Saudi Ministry of Finance warned on Tuesday.

The website of a cryptocurrency company in Singapore is promoting what it calls the CryptoRiyal and SmartRiyal, using the Saudi emblem of two crossed swords and a palm tree. Its “ultimate goal” is to finance NEOM, the smart city and tourist destination being built in the north of the Kingdom, the company claims.

“Any use of the KSA name, national currency or national emblem by any entity for virtual or digital currencies marketing will be subject to legal action by the competent authorities in the Kingdom,” the ministry said on Tuesday.

The fraudsters were exploiting ignorance of how virtual currencies work, cryptocurrency expert Dr. Assad Rizq told Arab News.

“A lot of tricks can be played,” he said. “Some of these companies are not regulated, they have no assets, and even their prospectus is sometimes copied from other projects.

“They hype and pump their project so the price goes up. Inexpert investors, afraid of missing out, jump in, which spikes the price even higher. Then the owners sell up and make tons of money.

“Cryptocurrencies are a risky investment for two reasons. First, the sector is not yet fully regulated and a lot of projects use fake names and identities, such as countries’ names or flags, to manipulate investors.

“Second, you have to do your homework, learn about the technology. And if you still want to invest, consider your country’s rules and regulations.”