Shareholders Run Helter Skelter As Zenith Bank Seeks Recovery of $100m Loan From Erin Petroleum

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Directors and shareholders of Zenith bank are running helter skelter like frightened life forms dreading the flare of an angry asteroid as you are reading this piece.

The fear of losing $ 100 million in loans to his client, Erin Petroleum Nigeria Limited, caused a stir in the bank’s base. Directors and shareholders of Zenith bank are running helter skelter as you are reading this piece.

The loss of this money would undoubtedly affect the capital of the bank. hence the bank has filed two separate applications to join a bankruptcy suit as an interested party in a last-ditch effort to recover $100 million in loans disbursed to Erin Petroleum.

The bank, widely adjudged one of the country’s biggest lenders, filed the applications before the Federal High Court in Lagos, Nigeria, and the United States Bankruptcy court for the South district of Texas Houston Division respectively.

The bank seeks to safeguard its interests in the assets of Erin Petroleum Nigeria Limited, a local arm of Erin Energy Corporation which had on April 35, 2018 filed for Chapter 11 bankruptcy in the United States.

Zenith Bank maintains it owns the legal rights to Oil Mining Lease (OML) 120 and 121 belonging to Erin Petroleum Nigeria Limited which the latter had sometime in 2014 used to secure a term loan facility of $100 million from the bank for the part financing and development of the oil blocks.

It affirms the existence of a deed of legal charge in favour of Zenith Bank over Erin Petroleum’s entire interest in the oil blocks covered by OMLs 120 and 120. Furthermore, a deed of all asset debenture was executed between Erin Petroleum and Zenith charging all assets of the former, whether present or future, fixed or floating, in favour of Zenith Bank Plc.

The two documents are understood to remain valid and legally binding on both parties throughout the term of the $100 million loan and until the full repayment of principal and accrued interest.

The bank, however, claims that at the time of entering into the term loan facility agreement and the disbursement of the loan sum to the company, the bank was not aware of the existence of any litigation, arbitration, or administrative proceeding involving Erin Petroleum or related parties thereof.

Its notice was drawn to a newspaper publication of a case whereby in February 2017, the Nigerian Agip Exploration Limited had obtained a final award against Erin Petroleum Nigeria limited and Allied Energy Plc from London Court of International Arbitration in abitration number: LCIA132498.

The case had stemmed from the transfer of OMLs 120 and 121 from Agip Exploration as seller to Erin Petroleum as purchaser. The arbitral judgment awarded the final sum of and interest thereon compounded on a monthly basis against Erin Petroleum Nigeria Limited.

The Nigerian Agip had in a bid to enforce the judgement locked the export valve of Erin Petroleum being the interest of which has been charged in favour of Zenith bank Plc for the repayment of the credit facility granted by the bank to Erin Petroleum Nigeria limited.

Zenith maintains it has at numerous times, engaged the management of Erin Petroleum in dialogue, in a bid to recover the $100 million loan, but the company serially defaulted on payment, including the non-payment of the principal sum of $4,903,272.79 and interest of $2,065,019 which were due on March 30,2018.

However, Erin Energy Limited had in April, filed a voluntary petition for Chapter 11 Bankruptcy in the United States with its allied companies, including Erin Petroleum Nigeria Limited following suit with similar applications before the United States Bankruptcy Court for the Southern District of Texas, Houston Division.

Zenith Bank claims it, being a recognized creditor of Erin Petroleum, was not a party to that suit. Moreover, the proper forum for creditor arrangement or business reorganization involving a company registered in Nigeria is the judicial division of the Federal high court of Nigeria where the corporate office of the company seeking reorganization is situated. The bank therefore swiftly filed an affidavit of fact before the US court stating the aforementioned facts to forestall the court from acting in excess of its jurisdiction.

In a sworn affidavit filed before the federal high court, the bank is urging the court to set aside an earlier order of May 25, 2018 registering the judgement of the US court in the grounds that the order was obtained by Erin Petroleum Nigeria Limited through suppression and concealment of relevant facts.

 

 

 

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