Emzor Pharmaceutical embroiled in N6.2b debt scandal with Nova Merchant Bank

Emzor Pharmaceutical Industries is currently embroiled in a debt scandal following the filing of a winding-up petition by Nova Merchant Bank Limited before the Federal High Court in Lagos.

The bank is trying to retrieve a loan of N6,205,575,569.93 (Six Billion, Two Hundred and Five Million, Five Hundred and Seventy Five Thousand, Five Hundred and Sixty Nine Naira, Ninety Three Kobo) that was granted to the firm.

The suit marked: FHC/L/CP/1044/2024 has been assigned to justice Chukwujekwu Aneke.

Listed as respondents in the suit are; Central Securities Clearing System Plc, Access Bank Plc, Ecobank Nigeria Limited, Citi Bank Plc, Fidelity Bank Plc, First City Monument Bank Plc, First Bank of Nigeria Limited.

Others are, Guaranty Trust Bank Plc, Jaiz Bank Plc, Keystone Bank Ltd, Polaris Bank Plc, Providus Bank Plc Stanbic Ibtc Bank Plc, Sterling Bank Plc, Standard Chartered Bank Plc, Union Bank of Nigeria Plc, United Bank For Africa Plc, TAJ Bank Limited, WEMA Bank Plc, and Zenith Bank Plc.

In a Motion on Notice filed by counsel to the bank, Mr. Oluwakemi Balogun SAN, he stated that the petitioner has issued on the respondent, the statutory three weeks demand notice required by Section 572 of the Companies and Allied Matters Act (CAMA) 2020.

He stated that the three weeks demand notice had since elapsed, yet the respondent has neglected to pay or to secure or compound for same to the reasonable satisfaction of the Petitioner.

Balogun stated that the respondent is unable to liquidate its indebtedness, by virtue of Section 574(1) of the Companies and Allied Matters Act (CAMA), Section 6(6) of the Constitution of the Federal Republic of Nigeria, 1999 as amended, Rule 183 of the Companies Winding-Up Rules, 2001, and by JB Order 30 of the Federal High Court (Civil Procedure) Rules, 2019.

He stated that substantially the whole of the assets of the respondent are personal in nature and are liable to be dissipated, removed, destroyed, and or otherwise evaporated by the alter egos of the Respondent unless a restraining order is granted to prevent the res from being dissipated.

In an affidavit deposed in support of motion on notice deposed to by Azeezat Adeniji, a Principal Officer in the employment of Nova Merchant Bank, the deponent stated that upon an application by Emzor Pharmaceuticals Industries Limited, the Petitioner by an offer letter dated 55h April, 2022 with reference number NVB/22/CBG/APRIL/05/004, granted a 2 type credit facility to Emzor Pharmaceuticals Industries Limited.

The Facility Type 1 is in the sum of $4,583,333.00 (Four Million, Five Hundred and Ejighty-Three Thousand, Three Hundred and ThirtyThree United States Dollars Only) to finance importation of various raw materials while the Facility for the Facility Type 2 is in the sum of N500,000,000.00 (Five Hundred Million Naira Only) to augment working capital requirement of the company.

She stated that the securities for the Facilities are: (a) All Asset Debenture over fixed and floating Asset of the Respondent to be shared pari-pasu with other lenders. (Facility Type 1&2), and (b) Personal Guarantee of Stella Okoli (Facility Type 2 only).

The deponent added that by a Board Resolution passed on the 6th day of April, 2022, the respondent at its Board of Directors Meeting approved, authorized and appointed the Managing Director, Dr. Mrs. Stella Okoli and Executive Director, Mrs. Uzoma Ezeoke to execute the offer letter of the Petitioner dated 5th April, 2022 for the 2 type credit facility in the sum of $4,583,333.00, and N500,000,000.00 respectively.

The Mortgage Debenture Trust Deed entered into by parties and being managed by UTL Trust Management Services Limited and Coronation Trustees Limited was duly executed on the 1st of December, 2022. Annexed and marked as Exhibit NMB 3 is a copy of the Mortgage Debenture Trust Deed dated 11th of December, 2022.

Further to the above and as security for the facility, the Personal Guarantee of the Respondent’s Managing Director, Dr. Mrs. Stella Okoli was duly executed and notarized on the 13th of April, 2022.

By virtue of the clause titled “other conditions” in the offer letter of 5th April, 2022, the Respondent in paragraph 8 covenanted with the Petitioner that “all sums outstanding in Emzor Pharmaceutical Industries Limited accounts pursuant to the above shall become immediately payable upon the Bank’s first demand and interest shall accrue thereon at the Bank’s ruling rate for unauthorized facilities until the outstanding sums are fully liquidated”.

Also, by the 5th April, 2022 offer letter under the clause titled “legal and other expenses”, the Respondent covenanted to reimburse the Petitioner for all out of pocket expenses including solicitor fees that may arise in the enforcement of the terms of the offer letter. And such costs shall be added to the facility and all other monies owing under the terms of the offer letter and shall bear interest accordingly.

The deponent added ” I am aware that due to the recaicitrant attitude of the Respondent towards offsetting the debt, a need arose for the Petitioner to contract the services of a Solicitor in instituting this suit.

She stated that the Petitioner wrote a demand letter to the Respondent informing them of their obligations which have fully matured and yet to be serviced. Annexed and marked as Exhibit NMB 7 is a copy of the demand letter dated 15th February, 2024.

But, due to the Respondent’s continuous and unremitting default or inability to honour the covenants in the Offer Letter, the Petitioner caused a Statutory Demand Letter dated 20th of March, 2024 served on the Respondent.

Yet, the respondent failed, refused, and neglected to repay the loan advanced to them by the Petitioner despite several commitments.

Consequently, the Petitioner is seeking for an order of court appointing the Deputy Chief Registrar of the Federal High Court, Lagos, as Provisional Liquidator of the Respondent to take over and oversee the affairs and continuous running of the Respondent’s Company pending the granting of the Winding-up Order by this Honourable Court.

“An order of interlocutory injunction ‘restraining the respondents, their Directors, members of Staff, Management, employees, officers, agents, privies or any other person or group of persons whatsoever under the Respondent’s authority or any other authority (howsoever derived or sourced) from operating, withdrawing from and/or otherwise tampering with the Respondent’s funds under whatsoever name or guise in the cited Bank or financial institutions pending the grant of the Winding-up Order by this Honourable Court.

“An Order of Interlocutory injunction (restraining the Respondent, their agents, servants and/or privies from tampering with, alienating, transferring and/or otherwise’ dissipating or otherwise appropriating the Respondents’ fixed and movable assets howsoever described and called, pending the grant of the Winding-up Order by this Honourable Court.

“An order of court directing the cited Respondents listed as 1-20 on the face of this Motion Paper to hold and disclose by way of a sworn affidavit filed within five days upon being notified of the order of this honourable Court (and a copy served on the Petitioner’s Solicitors) particulars of all assets, monies, real estate, stock, funds, bonds, cash deposits, bank guarantees, letters of credit and all negotiable instruments in the name of the Respondents up to the sum of N6,205, 575,569.93 (Six Billion, Two Hundred and Five Million, Five Hundred and Seventy Five Thousand, Five Hundred and Sixty Nine Naira, Ninety Three Kobo) being the outstanding indebtedness of the Respondent to the Petitioner as at 5″ of June, 2024 pending the grant of the Winding-up Order by this Honourable Court.”

Justice Aneke has adjourned the suit till July 12 for hearing.