Central Bank of Bahrain/Awal Bank: A collaborative approach

In August 2009, the Central Bank of Bahrain (CBB) appointed Charles Russell Speechlys as the external administrator of Awal Bank. Awal Bank was a member of the Saad Group of companies, all of which were owned and controlled by Maan Al Sanea.

Awal Bank was registered in the Kingdom of Bahrain, a leading regulated banking centre in the Gulf region. By 2009, Awal Bank was defaulting on its loan obligations to many banks around the world. At the time of our appointment as Administrator, there was a significant multi-billion (US$) shortfall between the bank’s assets and liabilities, making it one of the largest insolvencies ever in the Gulf region.

Saad Group owner and Awal Bank chairman Maan Al Sanea also held positions in the businesses of the al-Gosaibi family. In 2009, the family claimed that through one of their subsidiary companies, Al Sanea had misappropriated significant funds and channelled some of the funds through Saad Group companies.

The al-Gosaibi family sued Al Sanea and his companies, including some of Awal Bank’s subsidiaries, in the Cayman Islands, the United States and the UK High Court. This included the longest trial in the history of Cayman Islands’ courts, centred on claims of fraud, forgery, deceit, conspiracy and unjust enrichment. Awal’s subsidiaries successfully defended the Cayman claim, which was upheld on appeal.

Charles Russell Speechlys oversaw 13 years of administration and over 75 different court proceedings to recover or protect Awal Bank assets across 12 different countries, including the US, the Cayman Islands, the UK, Switzerland, Bahrain and Saudi Arabia, with gross realisations now exceeding US$820 million. Our team has included over 30 partners and associates across multiple international offices, numerous jurisdictions and time zones, each with varying regulatory and legal frameworks.

Highlights include successful applications for recognition of the administration process in the UK, US, the Cayman Islands and Switzerland. By opening parallel Chapter 15 and Chapter 11 bankruptcy proceedings in New York to formally recognize the Bahrain administration, Awal created novel law and became the first foreign (non-US) bank to get Chapter 15 protection in the US.

Patrick Gearon, Partner and Head of the Middle East, explains “Between 2009 and 2022, we worked in unison with the Central Bank of Bahrain’s legal team. All decisions were discussed and our collaborative approach added great value.”

The expectation in the first 12 months of Awal Bank’s administration was that the return to creditors would be about 9 cents in the dollar, but, as a result of the team’s achievements since first being instructed, in the latest report to creditors, Charles Russell Speechlys reported that the expected return would be closer to 45 cents in the dollar.

The Bahrain Court appointed Charles Russell Speechlys as liquidator in November 2022 and we have carried out this work throughout 2023. It was unusual for a law firm to be chosen to carry out this role.

“The creditors of Awal Bank are, in the main, international banks,” says Patrick. “They have all seen how the Central Bank of Bahrain and how the Kingdom of Bahrain, as a financial centre, has dealt with a problem that was none of Bahrain’s making and how both the Central Bank and Charles Russell Speechlys have been able to manage the process to date to maximise the return to Awal Bank's creditors.”

Patrick Gearon Partner, Head of the Middle East