Virgin Nigeria Sued Over $9.19m Loan

Guaranty Trust Bank Plc has filed a legal action before a Federal High Court in Lagos against Virgin Nigeria Airways, following the alleged inability of the airline to service an outstanding loan facility of $9.19m, about N1.3bn, allegedly secured from the bank.

In the petition before Justice Dan Abutu, the petitioner is asking the court to wind up the affairs of the airline under the provisions of Sections 409 (1) and 410 (1) (b) of the Companies and Allied Matters Act.

GT Bank had also alleged that on April 22, 2008, two loan facilities were granted to the respondents, which were meant for the finance of working capital and issuance of bank guarantee for the supply of spare parts.

It added that by another offer letter, dated May 8, 2008, the respondent was availed three loan facilities of $30m, $10m and N500m. The three loan facilities were said to be meant for the purpose of financing working capital, issuance of bank guarantee for spare parts and aircraft payment to suppliers and to finance Virgin Nigeria‘s working capital and issuance of bank guarantee to its suppliers.

The petitioner added that other facilities were extended to the respondent and that the securities for the funds disbursed included negative pledge dated May 9, 2009; revenue collection agreement dated May 9, 2009; and counter indemnity also dated May 9, 2009.

When the matter came up on Wednesday, lawyer to GT Bank, Mr. Kunle Ogunba, told the court that negotiation on amicable settlement of the matter had broken down.

Ogunba added that the development prompted his client to file several processes to challenge the objection raised by the defendant to the petition.

He said, ”We have filed a counter-affidavit to the defendant motion on notice and the notice of preliminary objection.

”As at the last adjourned date, we did inform the court of our intention to settle out of court. However, I was informed by my client (the petitioner) that negotiation had since broken down and we are ready to proceed with our case.”

But the lawyer to the respondent, Mr. Ekenna Okoli, who announced appearance on behalf of Mr. Kola Awodein (SAN), confirmed that negotiation in respect of an amicable resolution of the matter was inconclusive.

But he urged the court to grant another adjournment to enable the parties to further explore out of court settlement of the case.

Virgin Nigeria had, however, in its preliminary objection, claimed that the bank did not make a proper demand.

It added that there was no verifying affidavit, recognised by any law.

Virgin Nigeria also alleged that the bank did not allow the 23 days to lapse before filing the petition.

Justice Abutu has adjourned the matter till July 24 for report of settlement.