By ADAM SCHRECK, Associated Press
DUBAI, United Arab Emirates (AP) — Arcapita Bank, a Bahraini investment firm heavily invested in the United States and Europe, said Monday it has filed for U.S. bankruptcy protection in a bid to reorganize the company.
The firm, whose investments include U.S. women's apparel retailer J. Jill and British rail company Freightliner, sought Chapter 11 protection after failing to refinance a $1.1 billion loan due on March 28. It said it is using the filing as a way to protect its assets while it works out a turnaround plan.
"Filing for protection under Chapter 11 is not only a necessary step, but the best course of action to safeguard the interests of the bank's stakeholders," Chairman Mohammed Abdulaziz Aljomaih said in a statement. "It will allow Arcapita to restructure its balance sheet and reorganize its business to maximize recoveries for all creditors."
None of the companies Arcapita owns is included in the filing.
Arcapita has traditionally invested on behalf of wealthy Gulf Arab clients. Like other regional investors, it saw the value of its holdings suffer during the global financial crisis.
It recently tried to refinance the $1.1 billion loan — an effort it said was made harder by the ongoing eurozone financial crisis — and later sought to extend the existing financing deal for another three years.
Although it initially got support from some of its lenders, "certain nonbank creditors" made reaching a timely deal impossible, the company said.
Arcapita manages some $7.4 billion worth of investments, which include real estate holdings and several companies in Europe, Asia and the U.S.
It has sold off several investments in recent years in order to meet previous debt payments. The company owned fast-food chain Church's Chicken until 2009 and last year sold its stake in Caribou Coffee, the No. 2 American coffeehouse operator.
Arcapita expects its subsidiary companies will continue to operate while it works through its reorganization plan.
The firm is based on the small Gulf island kingdom of Bahrain. The country's reputation as a peaceful financial haven has been damaged by more than a year of widespread anti-government protests that frequently result in violent clashes between demonstrators and state security forces.
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