Bankruptcy Trustee Calls On Awal Bank To Reveal Creditor Claims

The Justice Department's bankruptcy trustee is protesting Bahrain's Awal Bank BSC's request to withhold from public view amounts owed to creditors and other financial details typically exposed in Chapter 11 bankruptcy cases, Dow Jones Daily Bankruptcy Review reported. The objection filed Wednesday puts the bankruptcy trustee at odds with the foreign administrator that Bahraini authorities have appointed to manage Awal's insolvency proceedings around the globe. That administrator has said that withholding specific creditor details is in line with procedures followed in Bahrain. The Central Bank of Bahrain placed Awal into administration in July 2009. But in papers filed with the U.S. Bankruptcy Court in Manhattan, U.S. Trustee Tracy Hope Davis said Awal is seeking "extraordinary and broad relief" without providing amble justification. The administrator "has failed to meet its burden to show that the public should be denied access" to an accounting of Awal's liabilities, Davis said. Typically, when a company files for Chapter 11 protection, it lists amounts owed to its major creditors and provides totals for assets and liabilities. On Awal's Chapter 11 petition, it named its 20 largest creditors but did not disclose the amounts owed to each. Subsequent accounting filed with the court listed total assets and liabilities as "unknown" or "undetermined." The bank did say, in court papers, that it had $5.5 billion in assets and $2.75 billion in liabilities as of July 31, 2009. The bank has said it should not provide specifics on its creditors claims because its Chapter 11 case, filed last October, is essentially an offshoot of its Chapter 15 case filed in 2009. The bank filed for Chapter 15 to gain recognition of its Bahraini proceedings in U.S. courts. Disclosing individual debts could be detrimental to the creditors because they filed their claims in Bahrain with the expectation that the details would be kept confidential, Awal has said. The bank has offered to file the debt details under seal, if the court requests. "Our application simply requests that the specific alleged amounts of each creditor claim, which are treated as confidential in the Bahraini proceeding...be treated similarly in this proceeding," Awal attorney David Molton said Thursday. Molton is partner with Brown Rudnick LLP. Davis, however, said Awal's path to filing for Chapter 11 does not exempt it from following the requirements of U.S. bankruptcy laws. Awal "has freely chosen to file a Chapter 11 case," Davis said. "Nowhere...is there a provision which states that when filing a case under another chapter, the debtor is exempt from compliance."