10th February, 2011
A stock broking firm, Vetiva Capital Management Ltd may cease to exist if a Federal High Court sittingÂ in Lagos accedes to the request of Bank PHB that the company should be wound up over unpaid debt ofÂ N4.2 billion.
According to a petition filed before the court by the law firm of A.O.S Practice on behalf of BankÂ PHB, the scenario that led to the current legal action started sometime in May 2008 when VetivaÂ Capital Management Ltd applied to the bank for a pre-private placement bridge facility in the sum ofÂ N3.5 billion on behalf of one of its clients, Messrs Caverton Offshore Support Group Ltd., to raiseÂ N16 billion to scale up the clientsâ€™ companyâ€™s operation and take advantage of long term businessÂ opportunities in the oil and gas sector of the Nigerian economy.
The request was granted andÂ Vetivaâ€™s client accepted the sum of N3.5 billion and N2.7 billion wasÂ immediately disbursed to the client. Subsequently, by â€˜cash collateralâ€™ agreement dated 13 June, 2008,Â the respondent client provided the bank with a right of set offÂ in the sum of 3.5 billion from itsÂ various accounts with the bank together with accrued interest.
The bank then disbursed the facility to the respondentâ€™s client under the terms of the offer while theÂ 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 wasÂ issued and executed by Vetiva Capital Management.
In addition, a board resolution of Vetiva company dated 19 June, 2008 was issued by the companyÂ authorising the aforesaid corporate guarantee which was issued on behalf of the company.
Notwithstanding the grant of the facility to Vetivaâ€™s client, Messrs Caverton Offshore Support GroupÂ Ltd., the respondent has neglected to repay the facility in the manner prescribed under the terms ofÂ the offer letter.
Upon the failure of Vetiva Company to liquidate the loan, the bank called in the corporate guaranteeÂ given by the company but the company requested for additional 180 days toÂ liquidateÂ the outstandingÂ debt. Meanwhile, compound interestÂ continued to accrue on the respondentâ€™s indebtedness to theÂ detriment of the shareholders and depositors of the bank whose funds were lent for the respondentâ€™sÂ client’s benefit.
The petitioner contended that in view of the respondentâ€™s breach of its obligations, the petitionerÂ and its solicitors issued demand notices on the respondent but the respondent has failed and refusedÂ to repay the loan.
“Consequently, the company is insolvent and unable to pay its debts in the circumstances, it is justÂ and equitable that Vetiva Capital management Ltd be wound up,” the petitioner said
Justice Olatoregun-Isola has adjourned the case for further hearing.