In a the notice of appeal filed by the corporation’s lawyers, AMCON contended that the lower court was wrong in dismissing the bankruptcy petition as premature despite the debt settlement agreement executed by the two parties during pendency of debt recovery suit, which Mr. Babalakin and his companies failed to honor.
The Asset Management Corporation of Nigeria (AMCON) has filed a notice of appeal against the ruling of a Federal High Court delivered on April 18, 2016, striking out the bankruptcy suit it filed against Lagos lawyer and businessman, Wale Babalakin (SAN).
In the notice of appeal filed by the corporation’s lawyers, AMCON contended that the lower court was wrong in dismissing the bankruptcy petition as premature despite the debt settlement agreement executed by the two parties during pendency of debt recovery suit, which Mr. Babalakin and his companies failed to honor.
The decision of the lower court in striking out the bankruptcy petition without hearing same, AMCON argued, was hasty and erroneous, having been premised on only one out of numerous grounds stipulated by the Bankruptcy Act.
AMCON said it executed ample loan and guarantee instruments with Mr. Babalakin and his companies, which processes would have been offered at the hearing of the petition filed against him.
But the lower court denied AMCON the opportunity to present its case by striking out the petition for non-fullfilment of factual pre-conditions. Mr. Babalakin, the corporation added, has not disputed his indebtedness to it either directly or through his companies. As such, AMCON added, he cannot be shielded from offering a substantive answer to AMCON's petition.
AMCON stated further that the proceedings and the decision of the lower court elevated technicality over fair hearing and justice. Section 1(a)(b) of the Bankruptcy Act, which the trial judge considered, it added, provides only a few instances when a debtor would be deemed to have breached the Bankruptcy Act and such are not exhaustive of the grounds in sections 1(a) and (b) of the Act, which provides for when a creditor has obtained final judgment or order against the debtor.
Rule 18 of the Bankruptcy regulations, which the trial judge relied so heavily on, said AMCON, relates to instances where final judgment or order have been obtained by the creditor against the debtor.
Other than obtaining of the final judgment or order against the debtor, it added, many other instances exist in the Bankruptcy Act when the debtor would have been deemed to have gone against the provisions of the Bankruptcy Act.
Consequently, AMCON said the bankruptcy petition at the Federal High Court, was not the ground on which it obtained final judgment against Mr. Babalakin.
On 18 April, a Federal High Court sitting in Lagos had struck out the bankruptcy suit filed by AMCON against Mr. Babalakin for non-compliance with proper procedure. But AMCON, which filed the suit to recover a debt of N10.3 billion from Mr. Babalakin, resolved to re-file the suit. It has, however, opted to file an appeal.
In an affidavit of truth of statement sworn to by AMCON’s Chief Legal Officer, Ben Daminabo, and filed before the court by human rights lawyer, Dr. Olisa Agbakoba (SAN), the corporation, while urging the court to adjudge Mr. Babalakin as bankrupt, is also seeking an order of the court directing that all his assets, interest and holding be liquidated and the proceeds applied towards offsetting his debt based on his personal guarantee in favor of his company, Roygate Properties Limited.
AMCON, a government intervention institution created for the purpose of efficiently resolving non-performing loan assets of banks, acquired Mr. Babalakin’s loan portfolio of N13,476,897,098.80.
AMCON, by virtue of and in the pursuit of its mandate, acquired from Guaranty Trust Bank, for valuable consideration, Mr. Babalakin’s debt. The debt, as at 20 October, 2011, stood at N13.476,897098.80 and had thus become subrogate in the place of the bank for the recovery of the acquired debt.
AMCON, as the petitioner, issued demands letters duly acknowledged by Mr. Babalakin to pay the debt. But rather than pay his admitted debt or submit a further proposal to pay, he resorted to court action to prevent and frustrate AMCON from recovering the debt.
Mr. Babalakin, as Chairman and alter ego of Roygate Properties Limited, executed a personal guarantee in the sum of N10.3 billion on behalf of the loan granted the company.
He is alleged to be indebted to many banks and a large number of his assets have been pledged to these banks as security for the loans.
Consequently, AMCON asked the court to grant a variety of orders. These include an order adjudging Mr. Babalakin as bankrupt, an order directing that all of Mr. Babalakin’s assets, interests, and holdings, either held personally or through third parties and privies, be liquidated and all the proceeds applied towards offsetting his debts. AMCON is also seeking an order divesting the respondent Mr. Babalakin of all shares, interests and holding in all public and private companies and an order of perpetual injunction restraining him from being appointed as a director in any public or private company in the country.
But in an affidavit in support of preliminary objection, sworn to by Ebele Oliko and filed before the court, the deponent averred that there is a pending suit before the court in respect of the debt, therefore AMCON did not comply with the conditions set out in the Bankruptcy Rules for the commencement of this bankruptcy proceeding. He therefore urged the court to strike out the suit. But AMCON, in a counter- affidavit, sworn to by a legal practitioner, Malechi Okafor, averred that Mr. Babalakin's preliminary objection was a ploy to frustrate the debt recovery suit.
In her ruing, Justice Olatoregun Ishola stated that there must be a judgment or an order before the commencement of bankruptcy proceedings. She added that the certified true copy (CTC) of the judgment or order is expected to be attached to the bankruptcy motion by the creditor.
The judge held that AMCON failed to comply with the laid down procedures in filing the proceedings, declaring the motion filed in the case as invalid and dismissing entire proceedings filed by AMCON.