Saudi Cable CEO clarifies details of ruling on objection to creditor claims

In an interview with Argaam, the top executive indicated that this decision is in implementation of the two core pillars of liquidation under the Bankruptcy Law, namely the FRP and the list of creditors' claims.

The FRP is prepared by the debtor and is guided by the trustee, while the list of creditors' claims is prepared by the trustee and the debtor provides input. This is all under the supervision and oversight of the judicial circuit governing the FRP, Khashogji stated.

He clarified that the court dismissed in June 2024 the FRP proposal submitted by the company, citing procedural and formal violations. Another proposal was then filed with the court after being prepared by the company based on the respective rules and in favor of all parties, including shareholders and creditors.

Yesterday’s court ruling is related to the second core pillar of the Bankruptcy Law, requiring the list of debts and creditors. Based on this, the court found the remarks submitted by the company regarding the existence of fundamental, formal and substantive violations in the list prepared by the previous trustee to be evident, including false debts and fictitious creditors.

Accordingly, the court revoked the creditors list and ruled to dismiss the previous trustee and appoint a new trustee to prepare a list that is precise in form and content, free of defects and does not contain false debts or fictitious creditors, according to Khashogji.

Stock Trading Suspension

According to Khashogji, Saudi Cable has suspended trading in its stock for Tuesday's session, in accordance with the regulating rules since the news is material and impacts the stock value, and in preparation for announcing the issuance of the ruling and its text.

This came while taking the necessary precautions to ensure that the news does not leak before publishing the announcement on the Saudi Exchange (Tadawul), being linked to other parties whose commitment to maintaining confidentiality is not guaranteed by the company.

The former creditors list, if approved, would have allowed some fictitious creditors to acquire 90% of the company's shares at a nominal value of SAR 10, potentially leading to significant losses for shareholders who could have lost 90% of their ownership. Not to mention that the value of its affiliated company amounts to SAR 1.7 billion, in exchange for claims not exceeding SAR 300 million, without prior approval from the extraordinary general assembly, which is mandated by the Companies Law in such cases, according to the CEO.

Court Ruling on Objection to Creditor Claims

Khashogji pointed out that the court ruling issued yesterday entailed several decisions, as follows:

First: Providing evidence against the trustee for violating the provisions of the Bankruptcy Law and its Implementing Regulations by not presenting factual claims to the debtor.

Second: Invalidity of the procedure to submit the list of claims.

Third: Revoking the judicial circuit's issued ruling (to approve the list of claims registered in it and submitted by the FRP trustee).

Fourth: Dismissing the trustee.

Fifth: Appointing a new bankruptcy trustee to replace the previous trustee in accordance with the tasks, powers and duties of the trustees as stipulated in the Bankruptcy Law and its regulations and rules.

Khashogji also confirmed that the ruling has no direct impact on the existing procedures in terms of adherence to the Bankruptcy Law and its provisions, but it will contribute to a comprehensive review of the list of creditors as the company works to write off some false claims and enable the authorized shareholders to vote and exercise the rights assigned to them by the law after several decisions related to the relevant violations were passed on the company without the permission or approval of shareholders.

Next Step

Saudi Cable will work, in cooperation with the new trustee, to prepare a valid creditors list that matches the company's records, backed by original and verifiable legal and regulatory documents.

The CEO added that the new list will be subject to the approval of the general assembly or the board of directors, as per the relevant rules and regulations.

He added that Saudi Cable is currently working on submitting the capital increase file to the Capital Market Authority (CMA) through its financial advisor Albilad Capital.

Khashogji also indicated that, upon finalizing the list of creditors' claims and getting the court’s greenlight through a judicial decision, the new FRP proposal will be voted on after it is filed with the Fourth Circuit of the Commercial Court in Jeddah to proceed with the financial restructuring.