HUDSON Petroleum company dragged to court over N2 Billion debt

Wednesday, April 26, 2023 9:06 am

Akin Kuponiyi

Hudson Petroleum Limited Company has been dragged before a Federal high court sitting in Lagos by Sterling Bank Plc alongside Petroleum marketing Company Petrocam Trading Nigeria Limited over an alleged indebtedness of N2 billion.

Hudson Petroleum Limited is a Private Limited Liability Company incorporated under the provisions of the Companies and Allied Matters Act and carries on the business of importation, procurement sales, distribution, and marketing of petroleum products with its corporate head office at 13 Agoro Odiyan Street, Off Adeola Odeku, Victoria Island, Lagos.

Petrocam Trading Nigeria Limited is a customer of the Sterling Bank and in the course of normal banking operations, the former maintains and operates accounts with the latter, while Hudson Petroleum Limited is an Oil Marketer and in the course of its business, gets allocation from the Federal Government of Nigeria through the office of the Petroleum Products Pricing Regulatory Agency (P.P.P.R.A) for the importation of Premium Motor Spirit (P.M.S).

Premised on the said allocation, the Defendant was desirous of raising the financial requirements to actualize the allocations made to it.

According to the statement of claim accompanied by a written statement on oath sworn to by the Account Manager of Petrocam Trading Company Mr.Taiwo Abiodun filed before the court by a Lagos Attorney, Barrister Gbenga Akinde-Peters, the Defendant then reached out to Petrocam Trading company and requested the latter to finance the importation of the petroleum products.

Consequently, Petrocam, due to its Banker/ customer relationship with Sterling Bank, applied to the bank for an enhancement of its existing trade facility to accommodate the transaction of the Defendant.

Consequently, by a Memorandum of Acceptance and Board Resolutions made on the 12th of December, 2012 and 23rd of July, 2013 respectively, Petrocam resolved to accept and accepted the enhancement sought from the bank on its existing Trade Finance Facility.

Having considered the application of Petrocam, Sterling Bank graciously granted the facility enhancement of United S state Dollar of 50 Million and United State Dollars of 31.9 Million respectively to accommodate the financing of several importation transactions of the Defendant via the Joint Venture transaction between Petrocam and Hudson Company.

Consequently, the Defendant at different times applied to the bank for the opening of Forms M and establishment of Letters of Credits facilities under the umbrella of Petrocam’s credit line with the bank.

Premised on the application of the Defendant and to effect the importation, the bank secured approval from the Central Bank of Nigeria through Forms Ms.

As a matter of procedure, the relevant authorities required the bank

to confirm the authenticity of the Letters of Credit and consequent upon which the bank confirmed the veracity of the LCs.

The Premium Motor Spirit was eventually delivered to the Defendant’s storage facilities and sold to the public in line with extant regulation/Directive from PPPRA under the Petroleum Support Fund (PSF) Scheme being regulated products.

Some of the delivery notes after vessel discharge from the Petroleum Products Pricing Regulatory Agency evidencing that the petroleum products were delivered to Defendant’s storage facilities are pleaded and shall be relied upon during trial.

Several times, Petrocam gave several instructions to the bank towards the credit of the collection account for the usage and utilization of the Defendant over the transactions.

The Federal Government also undertook certain reconciliation processes toward the settlement of obligations to various oil marketers including the

Defendant and this was further confirmed by the resolution of the National Assembly dated 24th July 2018.

However, contrary to the agreement of the parties and to the consternation of the Plaintiffs, the Defendant went behind the Plaintiffs and gave the Debt Management Office (DMO) a counter instruction to enable the Defendant to divert the funds released by the Federal Government representing Accrued interest amongst other things over the instant transactions, into an account domiciled with First Bank of Nigeria Plc which is different from the Collection Account; funds which ordinarily ought to have been paid into the Collection Account to reduce the bank’s exposure.

Petrocam was also able to monitor the readiness of the Promissory

Notes and knew when it was issued. When the Promissory Notes were released to the Defendant, it took the effort of the Plaintiff to stop the Defendant from submitting the Promissory Notes to First Bank of Nigeria Plc to get value.

Despite several reconciliation meetings, the Defendant continues to perform acts to worsen the position of the collection account maintained with the bank.

The parties met several times to resolve the issues and it was the agreement of the parties that Defendant shall ensure that the Promissory Notes already issued were reissued in favor of the account maintained with Sterling Bank for that purpose and to part liquidate the outstanding indebtedness.

In furtherance to this, the Defendant wrote a letter of domiciliation instructing the Debt Management Office (DMO) to correct, reissue, and domicile receivables accruable or due to it, into the Collection Account maintained with the Sterling Bank. This was including the ones that had been wrongly issued to First Bank of Nigeria Plc.

The Defendant also wrote a letter to the Debt Management Office (DMO) introducing a representative to whom all correspondences relating and

connected with the request for the correction and re-issuance of Promissory Notes should be directed.

However, the Defendant has taken several steps to frustrate the Debt

Management Office (DMO) and has deliberately refused to correct and reissue the Promissory Notes to reflect the name of the Sterling bank without a valid reason, even though the Plaintiffs are entitled to receive the instrument or funds or Promissory Notes or Sovereign Debt Notes due to the Defendant from the Debt Management Office (DMO) and relevant Federal Government Agencies.

Given the Defendant’s failure to perform its obligations, the Sterling Bank has been adversely exposed to the scrutiny of the regulatory authorities in its industry, particularly, the Central Bank of Nigeria due to the failure of the Defendant to perform its obligations under its transactions with Petrocam financed by the bank through the facility granted to Petrocam Company.

The Defendant continues to employ all manner of tactics as the reality shows that after pretending to be working with the Plaintiffs to ensure

that the Promissory Notes are corrected and reissued, it goes behind the Plaintiffs to also scatter the arrangement and in connivance with the

Debt Management Office (DMO) has refused to let the Plaintiffs take benefit of the Promissory Notes already due and issued.

It has now come to the attention of the Plaintiffs that the Defendant is also currently making moves to make sure that the remaining Promissory Notes yet to be issued/released by the Debt Management Office (DMO) are diverted. Meanwhile, the Plaintiffs’ exposure on the transactions as of 31st March 2022 stood at N2, 137, 187, 341.64

(Two Billion, One Hundred and Thirty-Seven Million, One Hundred and Eighty-Seven Thousand, Three Hundred and Forty-One Naira, Sixty-Four Kobo)

By the obligations of the Defendant particularly its domiciliation instruction/undertaking, the Plaintiffs are entitled to have paid over to the account maintained with Sterling Bank the sum of N2, 137, 187, 341.64 (Two Billion, One Hundred and Thirty-Seven Million, One Hundred and Eighty-Seven Thousand, Three Hundred and Forty-One Naira, Sixty-Four Kobo) to be paid from all sums due to the Defendant from the subsidy claims, Excess Bank Interest and Foreign Exchange Differentials from the Petroleum Support Fund (PSF) Scheme in form of Sovereign Debt Notes or Promissory Notes.

The Federal Government through the Debt Management Office (DMO) and relevant agencies has concluded arrangements towards making another settlement of obligations/payment of receivables to various oil marketers including the Defendant.

Despite the letters and agreement of the parties mentioned in the preceding paragraphs above, the Defendant’s actions now threaten the

actualization of receiving the receivables as the Defendant is currently making plans and has perfected the plans to divert the Promissory Notes/Sovereign Debt Notes expected to be received from the Debt Management Office (DMO).

The rest of this action is in real and complete danger by being completely dissipated any moment by the Defendant and unless the court intervenes, the Plaintiffs will be left in the lurch.

The funds utilized to fund the letters of credit for the importation of the Petroleum Products (PMS) were depositors’ funds and it behooves that the debt be liquidated.

The bank has been adequately exposed to the scrutiny of the Central Bank of Nigeria due to the large exposure relating to indebtedness.

Consequently, it will be in the interest of justice if Judgment is entered in favor of the Plaintiffs.

Whereupon the Plaintiff’s claims against the Defendant are as follows

A declaration that the Plaintiffs have the right to receive in the collection account maintained with the bank, the funds/ instruments due and payable to the Defendant from/issued by the office of Debt Management Office/ Federal Ministry of Finance and any other relevant Government Agency, particularly Sovereign Debt Notes/Promissory Notes; be it subsidy claims or Accrued interests and Foreign Exchange Differentials, paid by the Federal Government to the Defendant to liquidate the bank’s exposure that has emanated through the 2nd Plaintiff’s account, which funds were utilized by the Defendant and as at 31st March 2022 stood at N2, 137, 187, 341.64 (Two Billion, One Hundred and Thirty-Seven Million, One Hundred and Eighty-Seven Thousand, Three Hundred and Forty-One Naira, Sixty-Four

Kobo); in line with the offer letters the

Service Agreements made between the Defendant and the 2nd Plaintiff, the Defendant’s letter of irrevocable undertaking to the bank, the Defendant’s letters to Debt Management Office (D.M.O).

A declaration that the Plaintiffs are entitled to a LIEN on all the sums already paid and due to be paid to the Defendant from the office of the Federal Ministry of Finance/Debt Management Office and any other relevant Government Agency as subsidy claims or Excess Bank interests and Foreign exchange differential in form of Sovereign Debt Notes or Promissory Notes, to the extent of bank’s exposure that has emanated through the 2nd

Plaintiff’s account which was utilized by the Defendant to the tune of N2, 137, 187, 341.64 (Two Billion, One Hundred and Thirty-Seven Million, One Hundred and Eighty-Seven Thousand, Three Hundred and Forty-One Naira, Sixty-Four Kobo); as at 3 1 st March 2022.

A declaration that under and by the offer letters, the Service Agreements made between the Defendant and the 2nd Plaintiff, the Defendant’s letter of irrevocable undertaking to the bank, the Defendant’s letters to the Debt Management Office the Defendant is under obligation to ensure that all Sovereign Debt Notes/Promissory Notes, be it subsidy claims or Excess bank interests and Foreign Exchange Differential which are receivables already released or payable to the Defendant by Debt Management Office/Ministry of Finance to the tune of N2, 137, 187, 341.64 (Two Billion, One Hundred and Thirty-Seven Million, One Hundred and Eighty-Seven Thousand, Three Hundred and Forty-One Naira, Sixty-Four Kobo) are to be domiciled with the bank to liquidate the Defendant’s indebtedness emanating through the 2nd Plaintiff’s account.

Cost of this legal action to the tune of Ten Million Naira (N10,000,000)

Interest to the sum stated in the reliefs stated above at 23% per annum from 31st of March 2022 till Judgment and thereafter at 10% per annum until the Judgment sum is fully liquidated.