By Davidson Iriekpen, 07.23.2009

Guaranty Trust Bank (GTBank) Plc has dragged Virgin Nigeria Airways before a Federal High Court in Lagos over its alleged inability to service a loan facility of $9,194,577.36 (N1.3 billion) secured from the bank.
According to the petition before Justice Dan Abutu, the petitioner is urging 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 (CAMA).
According to the matter, the bank averred that on April 22, 2008, two loan facilities were granted to the respondent, which were meant for the finance of working capital and issuance of bank guarantee for the supply of spare parts.
The petitioner added that by another offer letter dated May 8, 2008, the respondent was availed three loan facilities of $30 million, $10 million and N500 million.
The three loan facilities were said to be meant for the purpose of financing working capital, issuance of bank guaranty for spare parts and aircraft payment to suppliers and to finance Virgin Nigeria’s working capital and issuance of bank guaranty to its suppliers.
It stated 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.
However, the petitioner said out of the total facilities granted to the defendant, a cumulative sum totalling $15 million was disbursed to the defendant, adding that the defendant failed and refused to reciprocate the good gesture by liquidating the debt.     
The petitioner further contended that it had written several letters to the defendant on the consequences of its constant breach of the agreement, all to no avail.
It added that Virgin Nigeria was insolvent, adding that it would be in the interest of justice for the company to be wound up over its inability to pay the debt.
The bank stated that the outstanding indebtedness of the respondent to the petitioner was colossal and had continued to attract interest in line with the prevailing practice in the petitioner’s industry.
It argued that the nature of the respondent’s business is in such a way that its assets could not be left in its hands without a credible supervision or provisional liquidator appointed by the court who will preserve its assets and funds in banks and other financial institutions in the country.
The bank noted that placing the assets of the airline in the custody of a provisional liquidator was the best way to preserve it pending the hearing and final determination of the suit, adding that pre-emptive orders of the court sought in the wind-up application was in line with the provisions of the laws especially as they relate to winding up proceedings.
It concluded by stating that since the airline’s directors could not be restrained from dissipating its funds or tampering with the assets without the orders of the court, it (the petitioner) would undertake to indemnify the airline in the event that orders sought via the application to wind-up ought not have been granted.
At the continued hearing of the matter, lawyer to the petitioner, Kunle Ogunba, told the court that negotiation on an amicable settlement of the matter had broken down.
Ogunba added that as a result of that, he was informed by 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’s 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 has since broken down and we are ready to proceed with our case.”
But lawyer to the defendant, Ekenna Okoli, who announced appearance on behalf of Kola Awodein (SAN), confirmed that negotiation in respect of amicable resolution of the matter was inconclusive.
He, however, urged the court to grant another adjournment to enable parties to the suit to further explore out-of-court settlement of the case.
The presiding judge, Abutu, has adjourned the matter till July 24 for report of settlement.
Virgin Nigeria has been flying in turbulence in recent times, starting with the cancellation of long haul flights. Recently, it was announced that the airline would soon drop the Virgin brand from its name.


http://www.thisdayonline.com/nview.php?id=149539

Interesting

I was really beginning to believe we are truly immuned to the economic crisis. First it was Acess bank against AP now GTBank against Virgin Nigeria. I really hope to God it ends with this two. Meanwhile, where are the fake prophets who gave us assurances of our invincibility.

NEXT CASE PLEASE

What's the fate of hundreds of employees under VN?

man. . .i dey FEAR oh! 

all this dragging to court means that  both parties are broke and in dire straits

how many more court cases are we going to see

the bottom of my bed is beginning to look more and more attractive as a vault 

OH LORD, WE PRAY FOR YOUR GUIDANCE ON WHERE TO PUT OUR MONEY, INFS (I No Fit Shout)

quadrillio:

OH LORD, WE PRAY FOR YOUR GUIDANCE ON WHERE TO PUT OUR MONEY, INFS (I No Fit Shout)

Amen-ooooooooooo

sad - what happens when you invest in naija.  

thunder fire the stupid mofos i senate and the presidency who do not have the first idea about creating an enabling environment for business

in a civilized society those sonasbitches wouldn't be able to  get elected as town dogcatcher

small time we will hear that virgin is setting up in angola or ghana

naija the giant joke of africa

OH LORD, WE PRAY FOR YOUR GUIDANCE ON WHERE TO PUT OUR MONEY, Lips sealed INFS (I No Fit Shout)

I use to see First Bank as an old school but now I am having a re-think.
At least my money will be save there

@OYB, Yes Virgin Nigeria is having problems but to say that GTB is broke that is why they are taking Virgin Nigeria to court is quite absurd. So you mean to say if GTB were not broke they would not bother taking Virgin Nigeria to court $9million is not small money to just turn into a bad debt when especially the whole world knows that Virgin Nigeria is seriously looking shaky.

GTBank is the only new generation bank wey my money go dey. na dem solid pass. u no go follow us go GTBank? how much be advert rates for nl?

Frankly I believe Virgin Nigeria should be disbanded forthwith, if not for job implications.

The Virgin group has used this 'airline' to rip Nigerians off for ages, and drains the company of useful funds through extortionate 'brand use' charges.

GTB is not a charity, so they have to chase any money owed them, even if it's 10,000 naira. I don't think it's a sign of weakness, but when you don't chase one debtor, the others will begin to gain confidence.

Virgin never had any good intention investing in Nigeria and should never have been allowed - they didn't even participate in the bidding process won by South African Airways, but OBJ smuggled them in at the last minute.

Arik which started after Virgin is growing in leaps and bounds but Virgin keeps struggling and 'buying' new jets when it can't service it's loans? What a ridiculous joke of a company.

debosky:

Frankly I believe Virgin Nigeria should be disbanded forthwith, if not for job implications.

The Virgin group has used this 'airline' to rip Nigerians off for ages, and drains the company of useful funds through extortionate 'brand use' charges.

GTB is not a charity, so they have to chase any money owed them, even if it's 10,000 naira. I don't think it's a sign of weakness, but when you don't chase one debtor, the others will begin to gain confidence.

Virgin never had any good intention investing in Nigeria and should never have been allowed - they didn't even participate in the bidding process won by South African Airways, but OBJ smuggled them in at the last minute.

Arik which started after Virgin is growing in leaps and bounds but Virgin keeps struggling and 'buying' new jets when it can't service it's loans? What a ridiculous joke of a company.

Wow debosky, thats a big statement o. How come they never had any GOOD intentions investing in Nigeria? I would have thought that with so many airline 'partnerships' around the world (Virgin Asia, Virgin Blue, Virgin America, Pacific Blue etc), Virgin - like any other company is only out to make [honest] money. Why should the Virgin Nigeria be any different from the others?

Is it not safe to say that probably, probably, PROBABLY, our own (Nigerian) business environment brought this upon us?

Anyway, i am saying all these because Branson happens to be one person that i like. A rich man who intensely enjoys his riches and is not ashamed about it. Another being Donald Trump

Epiphany:

Wow debosky, thats a big statement o. How come they never had any GOOD intentions investing in Nigeria? I would have thought that with so many airline 'partnerships' around the world (Virgin Asia, Virgin Blue, Virgin America, Pacific Blue etc), Virgin - like any other company is only out to make [honest] money. Why should the Virgin Nigeria be any different from the others?

The manner in which they came in was indicative - without bidding, without 'due process', simply a 'handpicked candidate'. Go and read further on how many hurdles they had to scale in the US before Virgin America was licensed in order to prevent competition distortion. They came into Nigeria to make a dishonest killing by getting an extremely lopsided deal from a government they likely bribed, just like Halliburton and co did.

The fact remains, they should never have been allowed in - they didn't bid, didn't bring anything apart from a name, which we more than paid dearly for, and are now leaving a crippled airline behind, stripped of it's lucrative international routes.

Is it not safe to say that probably, probably, PROBABLY, our own (Nigerian) business environment brought this upon us?

Why are other airlines still flourishing? Aerocontractors, Bellview Airlines, Arik Air? Business environment indeed - was it business environment that induced a company that can't service it's debts into buying new jets?

Anyway, i am saying all these because Branson happens to be one person that i like. A rich man who intensely enjoys his riches and is not ashamed about it. Another being Donald Trump

I'm glad you openly stated your motivations - there has been nothing clean or honest in this deal from the get go - instead of allowing a rival airline to flourish and compete with it on international routes, why not provide a lame duck competitor who is essentially subsidising Virgin Atlantic through exhorbitant 'branding charges'?

debosky:

The manner in which they came in was indicative - without bidding, without 'due process', simply a 'handpicked candidate'. Go and read further on how many hurdles they had to scale in the US before Virgin America was licensed in order to prevent competition distortion. They came into Nigeria to make a dishonest killing by getting an extremely lopsided deal from a government they likely bribed, just like Halliburton and co did.

The fact remains, they should never have been allowed in - they didn't bid, didn't bring anything apart from a name, which we more than paid dearly for, and are now leaving a crippled airline behind, stripped of it's lucrative international routes.
Why are other airlines still flourishing? Aerocontractors, Bellview Airlines, Arik Air? Business environment indeed - was it business environment that induced a company that can't service it's debts into buying new jets?

I'm glad you openly stated your motivations - there has been nothing clean or honest in this deal from the get go - instead of allowing a rival airline to flourish and compete with it on international routes, why not provide a lame duck competitor who is essentially subsidising Virgin Atlantic through exhorbitant 'branding charges'?

Well i do get your point but it still comes down to our operational/business environment being porous. How on earth should they have been allowed in when they did not follow due process? No bidding? Anyway, i remember the period - we all thought that SAA was going to be the preferred partner and all of a sudden, Virgin got it. Can you blame a business man anyway? They are all opportunists. If Branson was invited by Obj to come and chop, of course he will come and chop

Other than that, i sometimes see the other airlines you mentioned as being very very strict in terms of their business. The airlines, Arik, Aero and Bellview are strictly privately owned hence have a different operational structure - a no nonsense structure. They are strict with their profits and keep it so. With very close friends and colleages working in VNigeria, tales of woe emaneted from their offices. Tickets being given for free to people, tickets being sold at ridiculous prices (i bought a return ticket to the UK for 47,000 once when a similar VA or BA ticket was going for over 90,000), unusual operational staff structures, unlike VN - in fact, some said that Virgin Atlantic considered Virgin Nigeria as, 'our disabled African half brother'.

All said and done, i personally think that being partly owned by the government has resulted in some of the problems they have today. Yes, Branson's may have contributed to this, but if we have well learned people who cannot negotiate proper terms and agreements between Virgin Nigeria and Virgin Atlantic, then we have a problem. Sorry, they have a problem.

man. . .i dey FEAR oh!

all this dragging to court means that both parties are broke and in dire straits

how many more court cases are we going to see

the bottom of my bed is beginning to look more and more attractive as a vault

i disagree

i dont know of a rich man that will leave his/her money with a debtor for no justifiable reason
They are owing and the only permissible means of getting the money is through the law.

I dont think GTbank is broke.
Not at all

Epiphany:

Well i do get your point but it still comes down to our operational/business environment being porous. How on earth should they have been allowed in when they did not follow due process? No bidding? Anyway, i remember the period - we all thought that SAA was going to be the preferred partner and all of a sudden, Virgin got it. Can you blame a business man anyway? They are all opportunists. If Branson was invited by Obj to come and chop, of course he will come and chop

Other than that, i sometimes see the other airlines you mentioned as being very very strict in terms of their business. The airlines, Arik, Aero and Bellview are strictly privately owned hence have a different operational structure - a no nonsense structure. They are strict with their profits and keep it so. With very close friends and colleages working in VNigeria, tales of woe emaneted from their offices. Tickets being given for free to people, tickets being sold at ridiculous prices (i bought a return ticket to the UK for 47,000 once when a similar VA or BA ticket was going for over 90,000), unusual operational staff structures, unlike VN - in fact, some said that Virgin Atlantic considered Virgin Nigeria as, 'our disabled African half brother'.

All said and done, i personally think that being partly owned by the government has resulted in some of the problems they have today. Yes, Branson's may have contributed to this, but if we have well learned people who cannot negotiate proper terms and agreements between Virgin Nigeria and Virgin Atlantic, then we have a problem. Sorry, they have a problem.

Branson wasn't simply a part of the problem, he was a prime cause of it. He brought in $25m equity which was promptly siphoned out through brand charges and other ridiculous fees, and consistently ensured VN was poorer in terms of service and quality than VA.

Like I intially said, they should never have been allowed in. It was a criminal move and the airline should be liquidated once and for all. Other airlines are already representing us outside, let them continue to do so.

Virgin Nigeria should be restructured so that the debtor banks - UBA, GTB amongst others can recover their monies.

I think virgin is good simply because they render excellent services without excuses. Does GTBank have to wind them up? GT wetin dey now?

is the economic meltdown affecting both of them too. i thought they said we are immuned against it. sort yoursef out

:p

well done to branson. smart businessman. didn't throw his hard earned money into a bottomless pit like 9ja. he already knew what was going to happen. i've always said that nothing in 9ja can last more than 5 years. it must be destroyed. its part of our ingredients god used when making our mixture. everyone else should go pick their own share.

HMNN, if they succeeded in winding up Virgin Nigeria, more hustlers will be thrown to the street, hmnnn, reason you have to start your own business today, GO AND START SOMETHING , JOBS AINT NO MOE SECURED IN THIS PERIOD OF ECONOMIC MELTDOWN , contact me and lets talk business

GT should do all possible within legal limits to retrieve their funds.
A lesson I learnt from Warren Buffet, on rules that he sends to his staff every year:

1. never lose shareholders' funds
2. remember the first rule

with this guiding any firm, they sure will have to go & recover shareholder's funds cos in this jungle, there's no paddy!

pls GTB is among the safe banks in nigeria.no matter how much u have when somebody owes u that
kind of money virgin is owing,u will do everything to get the money back.
dont forget they gave 1.50k dividend for every share u have with them and 1 for 4 bonus, a broke bank wont do that

i hope y'all are right . . .

they say borrow a 1000$, and the bank owns you - borrow a million$ and you own the bank.

whenever things get down to the level of going to court

i won't claim to understand the banking industry, but i do remember reading that no bank wants its clients to fail , as that simply turns into a loss for the bank.

i have also read of some horror stories of steps banks have taken in the past - there was some story about access bank and some car dealer - maybe coscharis - which was eventually resolved by buying fords and forcing them on staff as deductible company cars.

anyway like i said, i hope y'all are right, but with all these rumblings in the industry, and all this washing of dirty linen in public

btw - debosky, did ol richard snatch some chick from you . this one dey look like beef

oyb:

they say borrow a 1000$, and the bank owns you - borrow a million$ and you own the bank.

whenever things get down to the level of going to court

i won't claim to understand the banking industry, but i do remember reading that no bank wants its clients to fail , as that simply turns into a loss for the bank.

i have also read of some horror stories of steps banks have taken in the past - there was some story about access bank and some car dealer - maybe coscharis - which was eventually resolved by buying fords and forcing them on staff as deductible company cars.

anyway like i said, i hope y'all are right, but with all these rumblings in the industry, and all this washing of dirty linen in public

btw - debosky, did ol richard snatch some chick from you . this one dey look like beef

Ol boy na serious beef o! From the day the deal was announced I knew it was doomed to fail. How will Branson come and create viable competition against his own company and own just 51%? Can anyone really be that daft? It was a matter of time before he sucked the thing dry, so I am not at all surprised.

People have seen this coming for ages, so much so that he felt that he was bigger than the government and could dictate where it could fly from and where it couldn't. It was doomed to fail and we would've been completely at the mercy of BA and VA if not for airlines like Arik and Bellview doing us proud on international routes. That was always their aim, make sure no credible opposition to them emerge.

What Prof was condoning so that it does become obvious that his efforts are all faltering are now been unravelled barely 2 month in office by the risk manager.

Why?He sent his team out to start probing all bank loans so he can have a true state of affairs.

Result.Banksa re running helter skelter before been caught.

More to come? OBVIOUSLY.

We need to sanitise the system (financial industry and economy as whole from 'professionals' who simply cook books year after year).

Watch out for the impact of uniform year end in banks!

Where are d bankers in the house? Open your eyes.

The revolution has commenced.