Key meetings of creditors of Bahrain-based Awal Bank have been held in Bahrain and London, according to sources.

The meetings were called by law firm Charles Russell, acting as external administrator, said the sources to the Gulf Daily News (GDN), our sister publication.

The London meeting was held at the law firm's office at Fleet Place yesterday (October 1) and the Bahrain meeting was held at the Sheraton Hotel on September 30.

The meeting notification sent to creditors said they would be provided updates on the progress of the administration that the bank has been under since 2009.

GDN was not allowed to attend the meeting in Bahrain or speak to the creditors who were required to sign non-disclosure agreements before they could attend.

It has also been learnt that Saudi Arabian conglomerate Ahmad Hamad Algosaibi and Brothers (AHAB), one of the creditors, was not invited to attend the meeting.

A representative of the Central Bank of Bahrain (CBB) was present at the meeting in Bahrain.

Awal Bank along with The International Banking Corporation (TIBC), also based in Bahrain, have been in administration since mid-2009, due to the failure of AHAB in 2009.

Financial institutions since then have been scrambling to recover an estimated $22 billion from them and other entities.

Around 65 banks have reportedly filed lawsuits against AHAB in 10 countries in an attempt to recover their money, including seven banks in Bahrain owed between $300 million and $400 million.

However, AHAB claims it is the victim of an elaborate fraud and 13 former bank officials are currently standing trial in Bahrain's High Criminal Court on charges of corruption.

A legal expert said "administration" functions as a rescue mechanism for insolvent entities and allows them to carry on running their business.

A company in administration is operated by the administrator (as interim chief executive) on behalf of the creditors as a going concern while options are sought short of liquidation.

These options include recapitalising the business, selling the business to new owners, or demerging it into elements that can be sold and closing the remainder. - TradeArabia News Service