The founder of embattled private-equity firm Abraaj Group has reached a settlement on a $48m bounced cheque allegation, his attorney said, allowing him to avoid prosecution as he manages a crisis at his firm.

Arif Naqvi, 58 years old, faced a potential prison sentence of three years if convicted on charges of issuing cheques with insufficient funds in Sharjah, one of the United Arab Emirates’ seven federated states. Sharjah prosecutors had issued an arrest warrant for him, said his attorney, Habib al Mulla.