Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
I suppose the liquidators now have to decide whether to pursue this on behalf of the FRC estate. I'm guessing they don't.
Agree with tsbs1. Five years ago after the delisting, the shareholders could have claimed against the company and directors, even the Nomad, in the UK for false and misleading public statements. As an AIM regulated company they had certain disclosure obligations, and the Nomad had an obligation to ensure those were met. In fact there was a poster Starrage who claimed he had sued and gotten a settlement from the Nomad.
Good luck collecting on any judgment though. The company had no assets in the UK, and any judgement would have faced the same difficulties collecting as YA and Mourant, who are still trying to get their money 5 years later. That claim is surely time barred now; at the time many counseled that going after the company would only damage its prospects and others calculated that a suit would only mean lots of legal fees with little hope of a return. Fast forward to now and its hard to come up with a cause of action against the company. They have no legal duty of disclosure of anything as a non-regulated company. They are not taking anyone's money now and seeking to defraud them, rather they seem to be trying to somehow have a future in Georgia. Hopefully they take old shareholders along for the ride.
The only thing that makes sense given that it would be subject to clawback if the "asset" (ie, the license/PSA) was moved out of the structure within 12 months ahead of the winding up is that there is currently no asset, the license being expired, etc.. Thus SN was content to let the former parent company go into liquidation without objection or dispute. Whatever other minimal assets remain (desks, computers, etc.) can now be fought over by the creditors such as Mourant and YA.
Meanwhile, the MOU is with FRUS (if I'm not mistaken). That is likely he same Texas LLC that was mentioned in the arbitrator's decision (which also mentioned it was a wholly owned subsidiary of FRC) that the company had previously attempted to transfer the license to. We have verified that it is still in existence and in good standing in Texas. That company had no assets pending the award of the license once the conditions were met, which included paying off the Georgian govt the amount of the arbitration award. That company had to have been moved out of the FRC structure to other owners (SN and associates).
There will then follow a chain of events assuming the liquidators don't challenge the above: SN/investors through FRUS fund the payments to Georgian government, new license with a reasonable exploitation period is awarded to FRUS, company is recapitalized with new investment and former shareholders excluding ZM are given a certain percentage in the new company, divided prorata to their previous holdings. As an example--new money gets 80% of the new equity, old investors 20%, divided according to their former holdings. This would presuppose that the company got the last known share register from the registrar and were able to determine who owned what. That could be a messy process given nominee holdings, etc.
This doesn't excuse the company from not making any statement properly qualified over the last 5 years to shareholders, but is an explanation for what may be going on behind the scenes. I think what Looed called "strategic ambiguity" and Ricardo called liability avoidance are the primary reasons for the silence, but those could have been mitigated or accomplished while still providing broader communications.
Just checked the Texas SOS site. Last filing by FRUS LLC was in December 2022. At the time, SN, Tyler Nelson and Luis Giusti were directors. Shows no info about ownership. Is in existence.
There's only one FRC -- Frontera Resources Corporation -- and it's the Cayman entity. It may be "registered" in other jurisdictions, but it is incorporated in Cayman. As Looed points out, it was at inception and at the time of the MOU a wholly owned subsidiary of FRC. It is organized as a Texas LLC so there may be some limited info about it from the Texas SOS. In any event, unless action was taken prior to the WUP to transfer FRUS to other ownership, it will be caught up in the bankruptcy estate. And even if the transfer happened before, the old issue of fraudulent conveyance will have to be addressed. If the transfer away from FRC was just ahead of the posse, there's a good chance it could be invalidated. Hopefully, that is not the case.
“ My opinion is that we have been fed a load of crap to keep us hopeful. He doesn't want us to take any action, then it will be too late when he gets what he wants!”
Absolutely.
Correct. The company in which shareholders held equity, FRC, is in liquidation. There is no more equity. Whatever value is left belongs to the creditors of FRC. SN and ZM were both creditors, having loaned money to FRC for operations over the years. Hope's loans were at a lower level, and the license at some point was approved to be transferred away from the entities within Hope's control and to FRUS. This transfer was contingent on FRUS/FRC satisfying certain obligations to GG/GOGC. We don't know if that happened though suspect it did not. It's possible some value could be allocated to equity holders as part of the winding up, to the extent there is any, like cash from the sale of assets or equity in a new holding company, but the creditors are in the driver's seat.
FRUS LLC is/was a subsidiary of FRC, or at least it was at the time of the attempted transfer back in days of the arbitration, so the shares of it to the extent they have any value will be doled out to creditors in the liquidation.
" ... sound and fury, signifying nothing."
Doesn't make any sense that these liquidator cases haven't been dropped. The creditors put these companies in liquidation. Who were the creditors? Hope, via the loan notes. If there's a comprehensive deal with Hope, why wouldn't he say to FIC, sorry my bad, never mind the liquidation? Maybe to keep a threat against the company pending payment of some obligations since the company is notorious for not honoring payment obligations? But if the license/PSC has truly been transferred to FRUS, it's beyond the reach of the liquidators anyway since they are liquidating only a couple of the other subsidiaries--FRCC AND FRIC. Looed any thoughts?
Lavrov is not wrong. The idiot political class in the US and Europe is foisting the aggressive anti oil and gas agenda on the rest of the world and negatively impacting the lives of ordinary citizens on the basis of at worst an outright lie and at best a gross exaggeration of the dangers of CO2 (aka plant food) emissions.
That's a bit of spin form the Company. The judgement by its own words is final. "This is a Final Judgment disposing of all claims between the Parties and is appealable."
The appeals court may decide the lower court was in error, which is always a possibility, but certainly they are in a worse position now that the court has recognized the UK judgement. And unless Frontera get some kind of injunction pending appeal, YA are free to try to enforce the judgement in Texas.
Excerpt from the Order Granting Plaintiff YA's Motion for Summary Judgment. There will be no trial on the merits, unless Frontera appeal and the decision is overturned. I expect Frontera will appeal to further kick the can and then play cat and mouse on service and with technicalities as YA attempt to enforce the UK Court judgment, which is now recognized in Texas.
ORDERED that Plaintiff's Motion for Traditional and No-Evidence Summary Judgment is GRANTED. It is further
ORDERED that the money judgment entered against Defendant by The Business and. Property Courts of England and Wales on June 29, 2021 ("June 29, 2021 Judgment") is recognized under the Texas Uniform Foreign-Country Money Judgments Recognition Act. See TEX. CN. PRAC. & REM. CODE§§ 36A.001, et seq. Accordingly, the June 29, 2021 Judgment is
(i) conclusive between the Parties to the same extent as the judgment of a sister state entitled to full faith and credit in Texas would be conclusive; and
(e) enforceable in the same manner and to the same extent as a judgment rendered in Texas.
....
This is a Final Judgment disposing of all claims between the Parties and is appealable.
From an article about recognition of foreign judgments in the U.S. It talks about the various reasons for nonrecognition.
https://www.carltonfields.com/insights/publications/2014/recognition-of-foreign-country-judgments-in-the-un
"2. Fraud. Foreign judgments “obtained by fraud” need not be recognized by U.S. courts. Here courts distinguish between extrinsic and intrinsic fraud. The former consists of some “fraudulent action by the prevailing party that deprived the losing party of adequate opportunity to present its case to the court.” The latter is predicated on allegations of improper conduct within the foreign proceeding, such as perjured testimony or falsified documents.
As a rule, intrinsic fraud will not be sufficient to deny recognition of a foreign judgment. Extrinsic fraud may be sufficient, depending on its seriousness. However, if the foreign court had considered and ruled on the issue of extrinsic or intrinsic fraud, U.S. courts will generally not second-guess the foreign court’s findings."
What FRR seem to be arguing is intrinsic fraud, which will not be sufficient to deny recognition.
They seem to now be using the recognition hearing/process to raise challenges to the underlying claim that should have been made at the UK proceeding. Instead, they took TWO default judgments, not even mounting a defense. Not sure if the Texas judge will be sympathetic to that. The question will be why didn't FRR raise the defense of fraud in the UK, the UK courts are better suited to adjudicate a UK fraud claim than a court in Texas.
I recall they had used Haynes & Boone in the UK to get the original default judgment set aside because FRR were improperly served but that was the extent of their response. No defense on the merits.
I agree with Monti, don't see any way to unhand him of his shares that he purchased by exchange of loan notes or bought in a placement or purchased on the open market. To the extent he was awarded any shares as part of his compensation, perhaps those could be forfeitable for breach of employment contract depending on the terms of the share award granting documents.
He's been off the board for a while, but as to his shares there's no way to relieve him of those outside of some deal struck with him to buy back or cancel in exchange for something (like maybe dropping the claims against him; recall the court that heard the ZM case ordered him to pay damages to the company), or to dilute or wipe him out of existence in a restructuring (which would be bad for average holders).
Thanks Looed very much indeed for keeping track.
Do you know what the quantum of the claimed amount was by Mourant? ZM and SN had joint and several liability originally under their guarantee of payment of Mourant's fees, but did the settlement have SN paying only a portion of that and Mourant is free to go after ZM for the remainder if they want?
Maybe we can sell to BLOE.
A UK court has twice ruled in favor of YA and issued a judgment in the amount of the debt plus interest. I think SN won't pay unless he knows the company is going forward as a viable business. If not, they will Chapter 7 (liquidate) FRC and walk away from the debt. If it is a going concern, they will settle with YA to move forward. So any settlement or payment to YA should be viewed as a good sign. IMO