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Federal High Court upholds UBA’s position in ₦156bn debt recovery battle against Stallion Group, Vaswani brothers.
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Justice Daniel Osiagor validates appointment of Romeo Ese as Receiver/Manager and affirms right to take possession of mortgaged property.
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Court holds guarantors liable, rules reconciliation exercise did not extinguish underlying indebtedness.
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Defendants restrained from diverting government receivables as court grants UBA’s reliefs.
October 16, (THEWILL) – United Bank for Africa (UBA) Plc has secured a major legal victory in its ₦156 billion debt recovery battle against the Vaswani brothers and Stallion Group, after the Federal High Court sitting in Ikoyi, Lagos, upheld the bank’s position and granted the reliefs sought in the proceedings.
THEWILL reports that Justice Daniel Osiagor of Court 6 of the Federal High Court, Ikoyi, delivered the judgement on Friday, affirming the court’s jurisdiction to hear the case and upholding the validity of UBA’s enforcement measures against the defendants.
The court also affirmed the liability of the guarantors and upheld the appointment of Romeo Ese as Receiver/Manager, clearing a significant legal hurdle in the bank’s efforts to recover the outstanding obligations.
In its decision, the court observed that the defendants did not dispute the existence of their indebtedness to UBA, but contested the amount claimed by the bank.
Justice Osiagor held that the disagreement over the exact amount owed did not invalidate the underlying indebtedness.
The court similarly ruled that the reconciliation exercise undertaken between the parties did not extinguish or negate the debt and, therefore, could not prevent UBA from exercising its lawful recovery rights.
In another significant finding, the court upheld the validity of the appointment of the Receiver/Manager and affirmed his right to take possession of the property mortgaged as security for the facilities.
It further held that the Receiver/Manager was entitled to seek protective orders from the court in furtherance of his responsibilities over the secured assets.
The ruling consequently strengthens the authority of the Receiver/Manager to protect the mortgaged assets and proceed with enforcement in accordance with the judgement and applicable law.
The court also dismissed an objection raised by the 12th Defendant over the mortgaged property.
According to the judgement, the 12th Defendant failed to establish any proprietary right over the property capable of sustaining its objection.
Consequently, Justice Osiagor held that the consent of the 12th Defendant was not required for the creation of the mortgage and dismissed its challenge.
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In another major aspect of the ruling, the court restrained the defendants from diverting receivables due to them from government agencies, effectively protecting revenue streams that could be relevant to UBA’s efforts to recover the outstanding debt.
The judgement also affirmed the liability of the guarantors, strengthening the bank’s position in pursuing recovery against parties who guaranteed the obligations.
The court resolved the issues submitted for determination in favour of UBA and granted the reliefs sought by the bank.
Background
The judgement is the latest development in UBA’s efforts to recover an alleged ₦156 billion exposure involving Stallion Group and the Vaswani brothers.
At the centre of the dispute are credit facilities extended by UBA, the securities created in connection with the obligations, guarantees backing the facilities and the bank’s subsequent decision to appoint a Receiver/Manager to enforce its interests over mortgaged assets.
The defendants challenged aspects of the bank’s claims and enforcement process, including the amount said to be outstanding. The court, however, found that the existence of the indebtedness itself was not disputed.
The distinction between a dispute over the precise amount owed and the existence of the debt became a central issue in the proceedings.
Justice Osiagor held that the reconciliation of accounts between the parties did not erase the underlying indebtedness or prevent the bank from enforcing securities created in respect of the facilities.
The ruling is also significant for secured lending and debt recovery in Nigeria, particularly on the enforceability of mortgage securities, guarantees and the authority of duly appointed receivers/managers.
