United States District Court, S.D. New York
In re ARCAPITA BANK B.S.C.(c), et al., Reorganized, Debtors. CAPTAIN HANI ALSOHAIBI, Appellant,
ARCAPITA BANK B.S.C.(c), et al., Reorganized Debtors-Appellees
Appeal arising from Bankruptcy Case No. 12-11076 (SHL).
For Captain Hani Alsohaibi, Appellant: Tally Mindy Wiener, Togut, Segal & Segal LLP, New York, NY.
For Reorganized Debtors, Appellee: Evan R. Fleck, Milbank, Tweed, Hadley & McCloy LLP (NYC), New York, NY.
MEMORANDUM & ORDER
WILLIAM H. PAULEY III, District Judge:
Captain Hani Alsohaibi appeals from an order of Bankruptcy Judge Sean H. Lane entered on November 21, 2013 sustaining the objection of Arcapita Bank B.S.C.(c) to Alsohaibi's claim.
See In re Arcapita Bank, No. 12-11076 (SHL), 2013 WL 6141616 (Bankr. S.D.N.Y. 2013). For the following reasons, the bankruptcy court's order is affirmed.
Arcapita Bank was a Bahrain bank which specialized in facilitating investments under Sharia law. Typically, Arcapita structured its transactions by establishing a Cayman Islands company (a " Holding Company" ) that acquired an equity interest in an unaffiliated target company. Arcapita then created another Cayman Islands company (a " Syndication Company" ) to which it transferred a portion of the equity of the Holding Company. Private investors could purchase an interest in the Syndication Company, thereby indirectly acquiring an interest in the target company.
Alsohaibi made several investments through Arcapita in 2005 and 2006. He invested $1 million in Fuselage Capital Ltd., the Syndication Company associated with target company Cirrus Industries, Inc. He later invested an additional $300,000 in Fuselage. In May 2011, Alsohaibi received $260,000 for his Fuselage stock as his share of compensation from a merger. Alsohaibi invested $100,000 in each of four Syndication Companies associated with Bahrain Bay Developments B.S.C.(c). After returns of capital in 2007 and 2008 of $125,719 and $114,061.42, respectively, he has a current net investment of $160,219.58 in Bahrain Bay Syndication Companies. Alsohaibi also invested $213,120.83 in each of two Syndication Companies associated with Riffa Golf and Residential Development Co. B.S.C.(c). After a return of capital in 2008 of $98,459.04, he has a current net investment in Riffa Golf of $327,782.62. In addition to his investments, Alsohaibi has a deposit account at Arcapita.
II. Procedural History
On March 19, 2012, Arcapita and certain of its subsidiaries (together, the " Reorganized Debtors" ) filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code. None of the Syndication Companies Alsohaibi invested in or the target companies they are affiliated with are among the Reorganized Debtors--that is, none of the companies Alsohaibi invested in have ...