We reported earlier that there’s a chance that Nigerian original equipment manufacturer, Omatek Ventures Plc could bounce back from its woes, following the striking out of a court case that the Bank of Industry (BOI) had against the company for owing ₦5.95 billion ($16.4m).
Apparently, Omatek is not out of troubled waters yet as BOI responded with an appeal to the Court of Appeal, Lagos Judicial Division. The bank has also refused to yield possession of Omatek’s Oregun property, despite the first case being struck out by the Federal High Court, Lagos.
Omatek had gotten a ₦3.9 billion ($10.7m) loan facility from the bank in 2012 that rose to ₦5.95 billion ($16.4m) by 2017 after which BOI sought legal action, which led to the seizure of the company’s Oregun, Lagos property.
However, things did not have to deteriorate to this level. Omatek could have taken some legitimate steps to save itself, long before BOI took legal action in 2017.
One of the ways Omatek could have saved itself was by court action. An indebted company that’s unable to meet up with its debt can take legal action to request for an extension of the loan facility tenure. This involves a forensic audit whereby a financial expert looks into the books of account of the concerned company. This would help the decision of the court as regards extending the tenure of the loan facility.
Indeed, legal practitioners consider this a delay tactic; the court could take many years to reach a final decision, mostly resulting in the creditor choosing to settle the case out of court. Either way, the indebted company would have more time to repay its debt.
Another option that was available to Omatek was voluntary administration. In this case, an independent and qualified administrator is appointed by the company to take over the affairs of the company. This allows the company to save itself or put the company in a position where it can pay off its debts.
LawyardNG Co-founder, Tobi Adebowale affirms that the appointment of an administrator for this option requires that the resolution of the company’s board be ratified by a high court.
From all indications, voluntary administration seems like the most appropriate option through which Omatek could have save itself, and its Oregun, Lagos property, last year.
Seeing as Omatek Ventures did not employ any of the above workarounds before it was taken to court last year, the original equipment manufacturer has only one shot left to save itself, should if find the ruling of the Court of Appeal unfavourable — appeal to the Supreme Court,
Worthy of note is that BOI could also appeal the ruling of the Court of Appeal if unfavourable to the bank.
NEW REPORT: Nigerian startups raised $17.6m in Q1 2019, 8.5% higher than they did in Q1 2018. Find out more in the latest quarterly edition of the Nigerian Startup Funding Report here.
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