Alleged N1.6bn debt: Nova Bank Asks Court To Wind Up Oil Firm

Nova Merchant Bank Limited has asked the Federal High Court in Lagos to wind up Midwestern Oil and Gas Company Limited following its failure to liquidate an alleged N1,648,649,286.68 debt.

The bank made the prayer in its petition in suit FHC/L/CP/2641/2023 filed on December 19, 2023 by its lawyer Mr. Oluwakemi Balogun (SAN) of Oluwakemi Balogun LP.

Besides the petition, Nova Merchant Bank also filed a motion on notice seeking leave to “advertise the Winding-up Petition of the Respondent, Midwestern Oil and Gas Company Limited, in the Federal Government Official Gazette, one national daily newspaper and other Newspaper circulating in Lagos State, where the registered office and principal place of business of the Respondent is situate or in such other Newspaper as the Court may direct in compliance with the Companies Winding-Up Rules 2001.”

The basis of the bank’s request is that the “Respondent is insolvent and unable to pay its debt or meet its obligations.”

Specifically, Nova Merchant Bank prayed that “the Respondent, Midwestern Oil & Gas Company Limited be wound up by the Court under the provision of the Companies and Allied Matters Act 2020 for its inability to pay its debt currently in the sum of N1,648,649,286.68.”

According to the petition, upon an application by Energy Link Infrastructure Limited, Nova Merchant Bank by an offer letter dated July 26, 2021, granted a N3 billion credit facility to Energy Link Infrastructure Limited for a project that Energy Link Infrastructure is undertaking for OML 18 (owned and operated by Eroton E&P).”

The securities for the facility are an “Irrevocable Domiciliation of $2 million proceeds from exclusivity agreement with Shell Western Supply & Trading Limited” and “Corporate Guarantee of Eroton Exploration & Production Company Limited.”

It said Energy Link Infrastructure failed to offset the loan repayment at its first maturity date (25th October 2021) and asked the bank for an extension. “The Petitioner extended the credit facility by another offer letter dated 5th January 2022.”

The Respondent covenanted its Corporate Guarantee dated 5th January, 2022, as security for the 5th January 2022 credit facility granted to Energy Link and this covered the N3billion.

The 5th January 2022 loan facility was tenured for 180 days with 60 days loan repayment and an interest rate of 18% per annum.

Again, due to the inability of Energy Link Infrastructure to repay the loan and upon an application by them, the Petitioner by an offer letter dated 16th August, 2023 restructured the credit facility.

It explained further that yet again, Energy Link Infrastructure failed to pay its debt following which the bank hired a solicitor whose fees being 15% of the outstanding sum as of the 28th of November, 2023 is N215,041,211.306.

This brought the Respondent’s total Indebtedness to N1,648,649,286.68 as of the time of Institution of the suit.

The petitioner added that “Due to 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 28th November, 2023 served on the Respondent…

“The Petitioner has given the Respondent a long period to liquidate its indebtedness and the statutory three weeks demand notice has elapsed. Yet the Respondent has neglected and refused to honour its obligations due to its inability to pay its debt.

“The Petitioner states that the Respondent has become insolvent as a result of the Respondent’s inability to pay its debt in the sum of N1,648,649,286.68 owed to the Petitioner..

“The failure of the Respondent to pay the Petitioner the sum owed has caused great financial hardship on the Petitioner.”