Kuwaiti debtors rush to start repayment process

Kuwaiti debtors rush to start repayment process

KUWAIT (Reuter): Wealthy Kuwaiti businessmen and investors staged a last-minute rush on Thursday to declare repayment plans on favorable terms in the emirate's huge, 12-year-old tangle of bad debt.

Banks worked overtime to handle the rush.

The debtors, who have never been publicly named but include some of Kuwait's richest citizens, have until midnight to sign up for repayment at a discount or long-term rescheduling.

Any who miss the deadline could face the threat of bankruptcy as their debts, which are now owed to the government, will fall immediately due.

The debts, owed by 9,546 people and totaling 5.7 billion dinars (US$19 billion), derive from the collapse of an unofficial stock exchange in 1982 and from commercial losses aggravated by Iraq's 1990-91 occupation.

Commercial bankers, who are acting as agents for the government in the registration process, said up to 99 percent of the debtors who had registered had chosen partial forgiveness with a promise to pay the rest by Sept. 6, 1995.

The other options are full repayment over the next 12 years, or a combination of the two methods.

The banks, which normally close at 2.30 p.m., planned to work till midnight to cope with the final registrations.

"We are pressured but we are under control," a banker said. "So far over 90 percent of the debt in our portfolio has been accounted for during the registration...They include some very wealthy people."

"In the last two days debtors have rushed to express their willingness for spot settlement or debt rescheduling," said Saad al-Nahed, an official of the Kuwaiti Banking Committee, a grouping of commercial banks

One unidentified debtor who registered owed 140 million dinars ($606 million), the official Kuwait News Agency reported.

Members of merchant families and senior government officials have been among debtors bowing to the threat of bankruptcy and trooping to declare their repayment plans under a debt settlement law that took effect on Sept. 6.

To unravel the tangle, which had hampered Kuwait's economy for a decade, the government bought the debts from commercial banks in 1992 in return for low yielding 20-year bonds.

As debts are repaid the government will redeem the bonds, gradually freeing commercial banks assets.