Deloitte successfully advises Saudi contractor through an in-court financial restructuring

Deloitte advises on another successful financial restructuring procedure in the Kingdom

25 July, 2022 – Deloitte’s leading KSA bankruptcy team has successfully advised on the financial reorganisation procedure of Al Harbi Trading and Contracting Company, a Riyadh-based company with approximately SAR 1.8 billion (USD 480 million) of debt across seven banks and more than 1200 creditors.

Al Harbi Trading and Contracting Company was established in 1965 and is one of the prominent players in the Kingdom’s contracting sector with key Saudi government and semi-governmental clients, specialising in the transport sub-sector.

On 29 June 2022, the Commercial Court of Riyadh ratified the company’s restructuring proposal following approval from the majority of the company’s creditors regarding its proposed restructuring plan. The restructuring was undertaken under the supervision of a court-appointed bankruptcy trustee, and under the laws and regulations of the KSA Bankruptcy Law.

The Deloitte team acted as the lead restructuring advisor working closely with the company, the trustee, the legal advisor, and the creditor group to develop a sustainable restructuring solution that is palatable to all stakeholders.

The proposal split the debt into various tranches offering the creditors a diversified repayment structure that leverages the existing assignment of receipts, asset pool, claim recovery and envisaged new business. The restructuring plan also included a combination of debt rescheduling, write-offs and an asset disposal plan which would allow the company to align its debt service capacity with debt commitments and enable an adequate recapitalisation of its balance sheet.

“Today marks yet another milestone in this journey where we have proudly helped our client and their creditors successfully navigate the complexity of a financial reorganisation transaction. Having led the charge in advising on numerous complex restructuring situations in KSA over the last few years, I believe our team is uniquely positioned to provide clients with tailored solutions and support them throughout the financial reorganisation process.”

“We expect the KSA bankruptcy law and the Financial Reorganisation Procedure specifically to continue to be widely adopted in the years to come as they have proven to be effective in circumventing some of the challenges of out-of-court restructurings,” said Karim Labban, Partner and Head of Deloitte Middle East’s Turnaround & Restructuring team in Saudi Arabia, who led the delivery of this transaction.