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Debt-strapped firm, upset by global economic crisis, looks for a fresh start.
Bahrain investment firm Arcapita today filed for bankruptcy protection in the United States, reported Reuters.
The firm issued a statement today saying it filed for Chapter 11 bankruptcy because it was unable to settle a $1.1 billion debt with its creditors, blaming the move on hedge funds, according to Reuters. Hedge funds are believed to hold an unusually high 25 percent of Arcapita's debt.
The company is based in Bahrain, a small Gulf nation that has seen nearly year-long anti-government protests that often turned violent, scaring off investers and unsettling firms like Arcapita.
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The company's $1.1 billion loan was due on March 28, said the Associated Press (AP). Despite efforts to negotiate a staggered repayment plan, the firm was unable to come to an agreement with what it called “certain nonbank creditors," AP quoted the group's statement as saying. Reuters said the term is widely used as a reference for hedge funds
Arcapita's solvency has been seen as a key issue for the region's financial stability. The firm also holds some $7.4 billion worth of investments in real estate and other companies in the US, Europe, and Asia, said AP. None of the assets were a part of today's filing.
The fim has been struggling to meet its obligations due to the global economic crisis and more recent complications caused by European market votality, said Reuters.
The Gulf-based firm, which traditionally served rich Gulf Arab clients, will be reorganized and efforts focused on a recovery plan, said AP.