Low-cost carrier Air Arabia started legal proceedings against Arif Naqvi, founder of embattled private equity firm Abraaj, through filing a misdemeanour case in a Sharjah court.
The Sharjah-based carrier's legal move follows arbitration proceedings it undertook in July, Air Arabia said in a statement on Wednesday.
"Air Arabia Group has investments outstanding with private equity firm Abraaj," it said. "In addition to Air Arabia’s claims submitted in the provisional liquidations of Abraaj Holdings and Abraaj Investment Management Limited, Air Arabia has commenced with legal proceedings against Abraaj founder Mr Arif Naqvi through the filing of a misdemeanour case in Sharjah court."
Habib Al Mulla, Mr Naqvi's lawyer couldn't immediately comment.
Abraaj Group, once the Middle East's biggest private equity firm with nearly $14 billion (Dh51.42) of assets under management, faced a liquidity and reputational crisis last year when four investors in its $1bn healthcare vehicle alleged mismanagement of funds and hired investigators to find out where the money had gone. It is undergoing a court-supervised restructuring and trying to sell off parts of the business to pay off debt. Air Arabia in June disclosed it had an exposure of $336 million to Abraaj through funds and short-term loans, making it one of the companies with the biggest exposure to the group.
"Air Arabia’s previously appointed team of experts continue to be fully engaged with the JPL’s [joint provisional liquidators], stakeholders and creditors involved in the matter as the court-supervised restructuring of Abraaj continues," the airline added.
The Dubai-listed carrier reiterated that the Abraaj investment has no major effect on its business.
“Air Arabia Group has a diverse investment portfolio and part of this is related to investment in Abraaj. Even though this issue has no significant impact on the carrier’s business or on its operations, Air Arabia remains fully committed to protect its investment and business interest," it said.
Abraaj’s sizeable portfolio and the sheer number of parties affected by the scandal has further increased the level of scrutiny the firm faces. It managed funds from its 20 offices in emerging markets spanning Latin America, Africa, the Middle East and Asia.