Insurance Coy Dragged To Court Over Unpaid Loan

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In a bid to recover a debt of N24 million, Equatorial Trust Bank (ETB) Plc, has dragged Consolidated Hallmark Insurance Plc before a Federal High Court in Lagos.

According to the claim of the bank filed before the court, sometimes in March 2008, the bank was approached by Hi-Point Solution Company for credit facilities to finance the execution of contract from Huawei Technologies Company Limited.

The bank approved that the credit facility of N160 million in the company’s favour be split into two and repaid in 60 days, while one of the conditions for drawing down of the said credit by the borrower was the receipt of a bond by a reputable insurance company.

In fulfilment of the above condition, Consolidated Hallmark Insurance issued credit bond with number CRB/08/04/0015/HQR and dated 8 April, 2008 as the insurance company held itself jointly and severally bound to the bank for payment as surety of the maximum sum of N80 million in favour of Equatorial Trust Bank.

The loan was supposed to be liquidated by 6 May, 2008, but the borrower failed to meet its obligation to repay the first tranche. The insurance company therefore appointed a debt recovery agent, Messrs. Ola Oluwole and Company, to recover the debt from the borrower and consequently, some money was paid.

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Since 29 January, 2010, however, no further payments were made despite series of letter and phone calls made to the insurance company but it remained adamant, while it refused to honour its obligation under the credit bond to liquidate the aforesaid sum.

Equatorial Trust Bank contended that the defendants refusal to fulfil the terms of the bond by paying outstanding sums claimed by the bank is unjustifiable.

The bank’s claim against the insurance company is in the sum of N24 million being the outstanding sum to the bank from the insurance company’s under credit bond as surety thereof in favour of the bank whereby the insurance company held itself bond to the plaintiff in the maximum sum of N80 million as security for the repayment of credit facility granted by the plaintiff to Hi-Point Solution Limited.

Justice Olatoregun Isola adjourned till 31 March, 2011 for continuation of the case.

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