July 14, 2024

Bank Urges Court To Wind-up Midwestern Oil & Gas Over Unpaid N1.6bn Debt

6 min read

Nova Merchant Bank Limited has filed a petition before the Lagos Federal High Court,plll seeking to advertise the winding-up of a petroleum company, Midwestern Oil and Gas Company Limited, over alleged unpaid debt of N1, 648, 649, 286. 68 billion.

The bank in a petition numbered FHC/L/CP/2641/2023, filed before the court, through its lawyer, Oluwakemi Balogun (SAN), said the petition is pursuant to Sections 571(D) of the Companies And Allied Matter Act 2022 Rules 4, 19, 20 and 184 of the companies winding-up Rule 2001 and under the court’s inherent jurisdiction.

Specifically, the bank is asking the court for an order granting it leave to the to advertise the Winding-up Petition of the company, Midwestern Oil and Gas Company Limited, once in the Federal Government Official Gazette, one national daily newspaper and other Newspaper circulating in Lagos State, where its registered office and principal place of business is situate or in such other Newspaper as the Court may direct in compliance with the Companies Winding-Up Rules 2001.

The bank also asked the court for any such further or other orders as the honourable court may deem fit to make in the circumstances.

Nova Merchant Bank Limited cited the following grounds that it’s petition is predicated upon: “Despite having been served the statutory notice pursuant to Sections 571 and 572 of the Companies and Allied Matters Act, 2020; the respondent is unable to liquidate its indebtedness in the sum of N1,648, 649,286.68 billion, owed to the petitioner as at November 28, 2023.

“Notwithstanding the issuance and service of the statutory demand notice on the Respondent within the contemplation of section 572 of the Companies and Allied Matters Act, Laws of the Federation of Nigeria, 2020, the respondent has refused, failed, and neglected to defray the debts owed to the Petitioner.

“The Petitioner/Applicant cannot advertise the Petition without the leave of this Honourable Court. The Petition when advertised will give notice to all those that may have interest in the respondent’s company as required by law.

“This honourable court is clothed with the vires to grant the instant application and It is in the public interest that the advertisement of the winding up Petition be granted.

The bank in an affidavit deposed to by Tomilola Onasanya, one of it’s Principal Officer, averred that the respondent, Midwestern Oil & Gas Company Limited, is a limited liability company registered under the Laws of the Federal Republic of Nigeria, licensed as a key operator in the oil & gas sector, with its Registered Office at Plot 10, Block 12, Otunba Adedoyin Ogungbe Crescent, Lekki Phase 1, Lagos, Nigeria.

The deponent averred that upon an application by Energy Link Infrastructure Limited, his bank, Nova Merchant Bank Limited, by an offer letter dated July 26, 2021 with reference number NVB/21/PSG/JUL/26 001, granted a credit facility in the sum of N3 billion, to Energy Link Infrastructure Limited for the mobilization and first-month operational cost of the emergency bargaining project that Energy Link Infrastructure 1s undertaking for OML 18 (owned and operated by Eroton E &P). And that the securities for the facility are:

a. Irrevocable Domiciliation of $2 million USD, proceeds from exclusivity agreement with Shell Western Supply & Trading Limited and Corporate Guarantee of Eroton Exp oration & Production Company Limited.

The deponent stated that due to the inability of Energy Link Infrastructure Limited to offset the loan repayment at its first maturity date (October 25 2021) and upon a request from Energy Link Infrastructure Limited, the petitioner extended the credit facility by another offer letter dated January 5, 2022 with reference number NVB/21/IB&SUB/JAN/22/001. Adding that as security for the January 5, 2022 Credit facility availed by the petitioner, the respondent covenanted its Corporate Guarantee dated January 5, 2022 covering the full principal amount of N3 billion.

He also stated that by a Board Resolution passed on December 31, 2021, the respondent approved and unconditionally accepted the terms and conditions stated in the offer letter dated January 5, 2022, authorizing to issue a Corporate Guarantee to the Petitioner on behalf of Nova Merchant Bank to secure a N3 billion. While on January 5, 2022 loan facility was tenured for 180 days with 60 days loan repayment and an inter est rate of 18% per annum.

The deponent stated further that by virtue of Clause 1 of the Corporate Guaranty Agreement, the respondent (including its successors in title and assigns) covenants with the bank on behalf of Energy Link Infrastructure Limited to reimburse the it of all sums due including interest at any time owed by Energy Link Infrastructure Limited in accordance with the terms and conditions of the offer letter without requiring the bank to first of all pursue any remedies against Energy Link Infrastructure Limited for non-payment or default of any of its contractual obligations. And that due to the inability of Energy Link Infrastructure to repay the loan and upon an application by them, the bank by an offer letter dated August 16, 2023, with reference number NVB/23/EPG/AUG/16/001, restructured the credit facility.

It also stated that for the avoidance of doubt, it was clearly stated that the  August 16, 2023, offer letter in an addendum to the offer letters dated July 26, 2021 and the January 5, 2022 with references NVB/21/PSG/JUL/26/001 and NVB/21/IB&SUB/JAN/22/001 respectively. As such, all other conditions inclusive of collateral and support as contained in the existing offer letters remains valid and subsisting until full amortization of the loan. Adding that the Corporate Guarantee issued by the Respondent to the Petitioner on behalf of Energy Link Infrastructure Limited remains valid and subsisting until full amortization of the loan.

On the particulars of demand by the bank, the deponent stated that “I am aware that on February 15, 2022, December 23, 2022 and October 23, 2023, the Petitioner wrote a demand letter to Energy Link Infrastructure Limited informing them of their obligations which have fully matured and yet to be serviced. Annexed and marked as Exhibit NV 6(i), 6(ii) and 6(iii) are copies of the Petitioner’s demand letters to Energy Link Infrastructure Limited.

“When Energy Link Infrastructure Limited failed, refused, and neglected to repay the loan advanced to them by the petitioner despite several commitments, the petitioner was constrained to call in the Corporate Guarantee issued by the Respondent as collateral for the loan.

“I am also aware that on October 23, 2023, the petitioner wrote a demand letter to the respondent informing them of the default of Energy Link Infrastructure and requesting them to honour their obligations in the Corporate Guarantee by making full payment of the sum due to the Petitioner. Annexed and marked as Exhibit NV 7 is a copy of the Petitioner’s demand letter dated October 23, 2023.

“I am aware that, the respondent by their letter dated November 7, 2023 sought to deny the existence of their corporate guarantee. Notwithstanding, given their duly executed Corporate Guarantee and the Petitioner having relied on same, | verily believe that the Respondent is lable. Annexed and marked as Exhibit NV8 is a copy of the Respondent’s letter dated November 7, 2023.

“Further to 16 supra, I know that the fetter of November 7, 2023 is of no moment and the Respondent cannot claim fraud or illegality relying on its Board Resofution passed on December 31, 2021 approving and authorizing the issuance of its Corporate Guarantee to the Petitioner on behalf of Energy Link Infrastructure Limited.

“I know also that as a result of the Respondent’s continuous and unremitting default or inability to honour the covenants in the Corporate Guarantee they issued in favour of Energy Link Infrastructure Limited, the Petitioner caused a Statutory Demand Letter dated November 28, 2023 served on the Respondent. Annexed and marked as Exhibit NV9 is a copy of the Statutory Demand letter dated 28th November, 2023.

“I know that as a result of the respondent’s inability to fulfil their obligations to the petitioner, the indebtedness of the respondent as at November 28, 2023, is in the sum of N1,648, 649,286.68 billion, and interest continues to accrue.

“I know for a fact that the failure of the respondent to pay the Petitioner the sum owed has caused great financial hardship on the petitioner.

“I verily believe that the respondent is insolvent and unable to meet their Obligations. I verily believe that unless the Respondent is wound up, the Petitioner would not be able to recover depositors funds trapped in the custody of the respondent.

“I verily believe that the petitioner/ applicant cannot advertise the petition without first obtaining the leave of this Honourable Court.

“The petitioner has now brought this extant application for the requisite leave of the Honourable Court to advertise the Petition and I verily believe that it would be in the interest of justice if this application is granted as the purpose of advertisement is to give notice to all those that may have interest in the respondent’s company to take necessary steps.

“I verily believe that the Respondent will not be prejudiced if this application is granted.

“I swear to this affidavit in good faith, conscientiously believing the content to be true and correct and in accordance with the Oaths Act.”

No date has been fixed for the hearing of the petition against the respondent.

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