$20M Judgment Debt: Court Adjourns Suit Seeking To Wind Up Eroton Exploration
Brightwaters Energy’s petition, filed on March 21, 2023, seeks an order to wind up Eroton on the grounds of insolvency and failure to pay the $20 million judgment debt
Justice Akintayo Aluko of the Federal High Court in Lagos has adjourned proceedings to wind-up Eroton Exploration & Production Company in a suit instituted against the company by a creditor of the company for definite hearing.
The suit, filed by Brightwaters Energy, alleges Eroton’s failure to pay a consent judgment debt of $20 million. The court then adjourned the case until February 14, 2025. In the action, Guaranty Trust Bank (GTB) had given Notice to appear at the proceedings to stay the action on grounds that Eroton also owes the bank N250 billion and that they are a secured creditor.
In response, Brightwaters Energy’s counsel, Olumide Aju SAN, however informed the court that the fact that a secured creditor has a charge over the assets of the company does not allow that creditor to stay proceedings because priority of creditors will eventually be determined by the liquidator once appointed, he also raised concerns about GTB’s alledged claim, questioning how the bank could substantiate such a large debt, particularly since it exceeds GTB’s single obligor limit as of 2018 when GTB purportedly granted Eroton the alleged loan. Mr Olumide Aju, SAN contends the alledged loan if true, is in fact the required capital of a whole bank in Nigeria of today
GTB’s lawyer, Mr Adeola Kembi, requested an adjournment to present further evidence ahead of the next hearing.
Brightwaters Energy’s petition, filed on March 21, 2023, in Suit No: FHC/L/C8/491/2022, seeks an order to wind up Eroton on the grounds of insolvency and failure to pay the $20 million judgment debt. The petition also highlights that a 21-day statutory demand notice, as required under Section 572(1) of the Companies and Allied Matters Act 2020, has expired without payment.
The petition claims that Eroton has insufficient assets to meet its liabilities and has failed to settle the admitted debt, which was agreed upon through a Terms of Settlement and confirmed in a consent judgment. The judgment, issued over a year ago, has yet to be honored.
Eroton, in its defence, filed had earlier a preliminary objection on May 3, 2023, arguing that the court lacks jurisdiction to hear the petition. Specifically, the company contends that the filing of a verifying affidavit along with the petition has deprived the court of jurisdiction.
In a counter-affidavit, Ernest Ugwu, a legal practitioner in the firm of solicitors representing Brightwaters Energy, emphasized that the winding-up proceedings were initiated based on Eroton’s uncontested indebtedness. He also stated that the consent judgment, adopted by the Lagos High Court in the earlier case Brightwaters Energy Limited v. Energy Link Infrastructure (Malta) Limited and Eroton Exploration and Production Company Limited (Suit No: LD/4344CM/2022), remains final and has not been overturned.
Ugwu further clarified that Brightwaters Energy is not involved in any commercial agreements between GTB and Eroton, which are the subject of separate legal proceedings, including Guaranty Trust Bank v. Eroton Exploration and Production Company Limited (Suit No: FHC/L/CP/1487/2024).
In an earlier ruling delivered on August 7, 2024, the court dismissed Eroton objection to jurisdiction and granted Brightwaters Energy’s application to advertise the petition. The case will resume on February 14, 2025, for further hearings when the court will hear all pending application including the Substantive Petition to wind up the company. More
