Thousands of small and medium Kuwaiti businesses could go to the wall after being walloped by the pandemic, potentially torpedoing a private sector central to the country's efforts to remake its unorthodox and oil-pumped economy, Reuters reported. The government, which spends more than half of its annual budget on the salaries of Kuwaitis who mostly work in state jobs, has encouraged citizens to set up their own businesses over the past decade in an effort to engineer a private sector.
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Kuwait
The executive regulations of the Bankruptcy Law approved by Kuwait's National Assembly a year ago were enforced as of Saturday, meaning 80,000 debtors breathed a sigh of relief as no more arrest warrants will be issued against them, Gulf News reported. The new law abolished Article 292 of the Procedure Code and does not treat failure to pay debt as a criminal offense, unless it is fraudulent.
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Kuwait’s government submitted a draft law to parliament seeking permission to withdraw as much as 5 billion dinars ($16.5 billion) a year from the country’s sovereign wealth fund to help finance a spiraling deficit, Bloomberg News reported. If approved by lawmakers, it would be the first time since the aftermath of the Gulf War in 1990 that Kuwait had extracted funds from the $600 billion Future Generations Fund. Previous withdrawals were treated as loans and had to be repaid.
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When Kuwait’s prime minister returns to office in the coming weeks, he faces an apparent paradox: the Gulf state with a $550bn sovereign wealth fund is running short on cash to pay ballooning public sector salaries, the Financial Times reported. Oil accounts for 90 per cent of its revenue, but slumping prices have hit the western ally’s income hard, putting its forecast deficit close to 40 per cent of GDP, higher than it was in the 1990s, during the financially perilous aftermath of the first Gulf war when Iraq invaded Kuwait.
Kuwait’s parliament passed a long-awaited insolvency law on Tuesday to help attract investment and commerce, Bloomberg Law reported. The absence of insolvency protection has been cited as a significant deterrent to foreign investment. The new law restructures the legal framework for bankruptcy to focus on rehabilitating troubled companies rather than liquidation.
Kuwait’s Public Institution for Social Security is seeking the liquidation of Abraaj Holdings as creditors step up pressure on the Dubai-based buyout firm that’s facing allegations of misused funds, Bloomberg News reported. The fund filed a petition in the Cayman Islands for the liquidation and winding up of Abraaj Holdings after the firm defaulted on a $100 million loan that was due on June 3, the Public Institution for Social Security said in a statement. The fund holds a stake in Abraaj Holdings and had provided $731.8 million in loans and investments by 2013, it said.
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Kuwait’s pension fund is trying to force private-equity firm Abraaj Group into bankruptcy proceedings over allegedly not repaying a $100 million loan, according to a court document, upending efforts to save Dubai’s star investor, The Wall Street Journal reported. In a document filed May 22 in the Cayman Islands court system, Kuwait’s Public Institution for Social Security says Abraaj is “substantially insolvent” and unable to repay the loan and $7 million interest by the agreed upon date, which is Sunday.
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Indebted Kuwaiti financial firm Investment Dar is seeking court approval to help close a 813 million dinar ($2.7 billion) debt restructuring, according to an official document seen by Reuters. The new plan, called Dasman, is designed to overcome minority creditor dissent to earlier proposals by asking Kuwait's Court of Appeal to impose the deal on all creditors. The plan involves transferring Investment Dar's assets, and the management of their disposal, directly to creditors.
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Kuwait is finalising what will be the Gulf's first insolvency legislation designed to help failed businesses recover from financial difficulties rather than be shutdown, leaving creditors out of pocket, ArabianBusiness.com reported. The draft law would allow companies at the brink of financial collapse to seek court protection and business rehabilitation, instead of liquidation, DLA Piper regional managing partner Abdul Aziz Al Yaqout, who has been working on the legislation, told Arabian Business.
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Investment Dar, the Kuwaiti firm best-known for its stake in luxury carmaker Aston Martin, hopes to complete a second debt-for-assets deal with creditors by the end of March, it said in a bourse statement on Tuesday, Reuters reported. The sharia-compliant firm said on Nov. 18 it had received the backing of a "significant majority of investors" for the proposal, which would see creditors voluntarily exchanging debt for ownership of a portfolio of assets.
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