KBBO Group restructuring receives creditor and court approval

A plan to restructure Abu Dhabi-based investment firm KBBO Group and its hospital unit has received court approval following months of negotiations. Deloitte is acting as trustee of the group and is overseeing the restructuring process.

The KBBO Group, founded in 2008 by a group of businesses and investors, comprises three divisions: Emirates Hospital Group (hospitals and clinics), a consumer products division (including the brand Freshly Frozen Foods), and an investments arm holding interests in a diverse range of businesses.

KBBO Group collapsed around two years ago, when founder Khalifa Bin Butti Al Muhairi filed for bankruptcy at the Abu Dhabi court. KBBO Group’s downfall was the result of the collapse of NMC Health – KBBO Group was one of the biggest shareholders.

Over the past 24+ months, a complex process unfolded – aimed at keeping operations running (a rescue package from Fidera for example ensured the ongoing operation of Emirates Hospital Group) while at the same time recovering and safeguarding the assets of KBBO Group’s entities. Meanwhile, behind the scenes, experts worked on a comprehensive turnaround and financial restructuring plan.

On August 14, 2023, a breakthrough was achieved when the majority of creditors for the KBBO Group and associated entities agreed upon a restructuring plan under the UAE Bankruptcy Law. Last Friday, the court also provided green light.

“This court approval marks an important milestone for the KBBO Group case and for the UAE Bankruptcy Law that successfully allows for the financial restructuring of an extremely complex transaction,” said Paul Leggett, partner at Deloitte and Trustee of the KBBO Group (alongside fellow partner David Stark).

The KBBO Group restructuring includes 29 corporate applicants and two shareholders, and will be implemented “in order to maximize the return for all of the creditors with AED 7 to 12 billion of claims, including multiple complex cross guarantee positions,” explained Leggett.

An integral part of the plan is the restructuring of Emirates Hospital Group, which includes raising AED 150 million dirhams in new money, the recapitalisation of its balance sheet, along with an option to implement an asset disposal/rationalisation plan.

Emirates Hospital Group operates 2 hospitals, 3 day-surgery centers, 18 clinics, 3 rehab centers, and 11 pharmacies. “The prevention of liquidation for the Emirates Hospital Group has ensured continued access to medical care for the public, preserved 2,000 jobs and benefitted the local economy through the continued operation of hospitals and clinics,” said Leggett.

According to data from the Abu Dhabi Court, the KBBO Group restructuring is to date the largest successful onshore bankruptcy case under the jurisdiction of the UAE Bankruptcy Law, which was introduced in late 2016.

“We expect the UAE Bankruptcy Law to be widely adopted in the years to come, and companies, bankers and their lawyers, should be encouraged to utilise the legal framework, particularly to circumvent some of the challenges of out-of-court restructurings and as an alternative to a liquidation process,” commented Leggett.