Bank PHB Wants Court To Wind Up Company

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A stock broking firm, Vetiva Capital Management Ltd may cease to exist if a Federal High Court sitting  in Lagos accedes to the request of Bank PHB that the company should be wound up over unpaid debt of  N4.2 billion.

According to a petition filed before the court by the law firm of A.O.S Practice on behalf of Bank  PHB, the scenario that led to the current legal action started sometime in May 2008 when Vetiva  Capital Management Ltd applied to the bank for a pre-private placement bridge facility in the sum of  N3.5 billion on behalf of one of its clients, Messrs Caverton Offshore Support Group Ltd., to raise  N16 billion to scale up the clients’ company’s operation and take advantage of long term business  opportunities in the oil and gas sector of the Nigerian economy.

The request was granted and  Vetiva’s client accepted the sum of N3.5 billion and N2.7 billion was  immediately disbursed to the client. Subsequently, by ‘cash collateral’ agreement dated 13 June, 2008,  the respondent client provided the bank with a right of set off  in the sum of 3.5 billion from its  various accounts with the bank together with accrued interest.

The bank then disbursed the facility to the respondent’s client under the terms of the offer while the  bank was appointed as the sole receiving bank for the N16 billion private placement arrangements.

In compliance with the terms of the agreement, a deed of corporate guarantee dated 18 June, 2008 was  issued and executed by Vetiva Capital Management.

In addition, a board resolution of Vetiva company dated 19 June, 2008 was issued by the company  authorising the aforesaid corporate guarantee which was issued on behalf of the company.

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Notwithstanding the grant of the facility to Vetiva’s client, Messrs Caverton Offshore Support Group  Ltd., the respondent has neglected to repay the facility in the manner prescribed under the terms of  the offer letter.

Upon the failure of Vetiva Company to liquidate the loan, the bank called in the corporate guarantee  given by the company but the company requested for additional 180 days to  liquidate  the outstanding  debt. Meanwhile, compound interest  continued to accrue on the respondent’s indebtedness to the  detriment of the shareholders and depositors of the bank whose funds were lent for the respondent’s  client’s benefit.

The petitioner contended that in view of the respondent’s breach of its obligations, the petitioner  and its solicitors issued demand notices on the respondent but the respondent has failed and refused  to repay the loan.

“Consequently, the company is insolvent and unable to pay its debts in the circumstances, it is just  and equitable that Vetiva Capital management Ltd be wound up,” the petitioner said

Justice Olatoregun-Isola has adjourned the case for further hearing.

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