Arif Naqvi, founder of embattled Abraaj Group, launched an unsuccessful attempt to save the firm in August with a restructuring proposal, Private Equity International has learned.
Joint provisional liquidators Deloitte and PwC received an outline of the plan from Naqvi’s representatives on 16 August, according to creditor documents seen by PEI.
Naqvi’s proposal included an offer to contribute shares and give up carry in return for being released from claims against him. The documents did not specify how much share capital Naqvi proposed contributing. He also suggested appointing a chief restructuring officer to oversee the disposal of limited partner stakes and other assets over a period of several years, based on the assumption that these would increase substantially in value over time.
Naqvi’s plan also involved amalgamating the company and Abraaj Holdings’ estates and pooling their cash, and selling the platform on a “stable” operating basis either through a request for proposal process or guardianship process that could take as long as 12 months.
The JPLs concluded that the proposal had “significant difficulties” and did “not appear to be fully developed”, the documents noted. It deemed LPs unlikely to support any proposal for the company to continue managing the funds beyond the current sales process and that the suggestion his proposal would result in a better return to creditors than in an official liquidation was not supported by detailed analysis.
“The company is, however, deeply insolvent and faced with many unresolved issues including allegations of historical misconduct and impropriety,” the documents noted.
“Further, the company has lost the confidence and support of its creditors as well as the vast majority of the LPs of the various funds it manages. In summary, the sub-stratum of the company has ceased to exist and it is not capable of being restructured as a going concern.”
Members of Abraaj’s liquidation committee indicated their desire in October to discuss the restructuring proposal with Naqvi via a conference call. This meeting was convened by the JPLs and held on 5 November.
A collection of artwork owned by Abraaj went under the hammer last month at UK auction house Bonhams amid efforts to recoup money from the company. The listing generated £4.65 million ($6 million; €5.3 million) over three sales, according to statement from Bonhams.
Deloitte and PwC were appointed as JPLs in June to restructure Abraaj Holdings and the fund management business and sell their assets. Reports first emerged in February that LPs in Abraaj’s $1 billion global healthcare fund had hired an auditor to trace money.
Deloitte declined to comment. Naqvi did not return a request for comment by press time.