If it comes down to a declaration of solvency which is supported by a vendor guarantee and/or commercial flows/tie up then I support the action that’s been taken. Spend £2m or whatever the amount is on legal fees to chase millions more in damages, which also provides more time to secure finance. The delisting was the killer here for a quicker fix I reckon.
Any accountant types that can shed any light on exactly what this will lead to, if one is submitted? I know it means we are confirming we think we can pay all debts within 12m but does it actually give us that period in which to do so? I assume the liquidators oversee the repayment, but what happens once everything is repaid. Does the company cease trading? Or is it irrelevant as the asset has been transferred?
I would be worried if their response (assuming they make one) has no reference to the solvency declaration as that has to be a trump card for us in terms of educating the judge around commerciality. Unless the solvency Dec relies solely on personal wealth of the Directors
Agreed, this seems highly plausible theory. The other bonus if this is a correct is that it means the Durham loan potentially fell through due to de-listing, rather than due diligence findings (oil flows not hitting the numbers). Of everything I’ve read this seems most likely and would certainly explain the delaying tactics.
ODR - was thinking the same, hopefully it will be covered in FRRs 30/5 response to the court? So next Friday morning unless they produce earlier (not sure any point on waiting to last minute as Hope doesn’t get option to respond to this one).
The other argument here is that we took a punt on going after Hope with the risk being hefty legal fees and the reward being millions of $? So if it comes to nothing we pay out the fees but maybe they felt they had enough evidence (or took the gamble that discovery would give them what they need).
Forget about the court case and fiduciary duties - on Dec 23rd last year if someone said we could get Hope off the board (done) and the notes repaid (pending) then we’d all be happy. So FRR now need to make the case that they can repay note within 12 months and continue to operate as a going concern. On the assumption that lenders will want to release funds only upon conclusion of the legal issues then maybe this all gets sorted through a straightforward transaction over the next few weeks or months. The key is demonstrating to the court we have means to repay. Maybe the personal guarantees come in to play here with SN and ZM’s personal wealth?
Hope has until cob tonight to respond, believe we can then counter up until cob 30/5, and then hearing scheduled for 6th. So tonight, next Thursday and then the Thursday following. You can switch off in between. As if!
Another element I’m not clear on..... FRR quoting the “realistic prospect of success on appeal” line - there was some debate about interpretation of this statement but I’m guessing FRR view it as relevant as they reference it, which is a positive. Did we ever find out why the judge felt that way or was that due out in the summing up which never came because the case was stopped? Is the judge obliged to tell us why, and should FRR know why? That becomes a massive part of this debate now, if, as it seems, we don’t have any other cards to play (unless discovery throws something up) so I’d love to know a bit more about why they judge said this. Maybe we will never know if the case was stopped.
I agree about it being key to get to trial, but I still have a nagging doubt about the seemingly primary issue FRR have put forward, which is the blocking of funding by Hope. Hope was adamant that the JCAM funding fell away (it didn’t get to the ‘blocking’ stage) and the other funding option was Zaza asking for seniority. However much emotion you put alongside the facts to the jury, if Hope’s version is correct then I don’t fancy our chances. You can’t have Zaza putting forward an emotional argument about helping Georgia to prosper and the company being one step from greatness but held back by lack of funding, but on the other hand only putting forward funding if he obtained seniority - as a neutral (juror) my first thought would be if you believe in the company so much inject funding behind OMFs debt. And if you don’t want to, don’t blame anyone else if the company becomes insolvent. One contradicts the other imo and it doesn’t leave me feeling positive. Agree with Contra, discovery is key.
Thanks 5p - that’s really encouraging. The answer on the re-list - too many variables for them to say anything concrete but the fact they have answersed that question is encouraging,
Issues with being able to inject capital in to the company due to debt seniority so the boys say screw it, we’ll do it via personal funds from the PG?
That would be a nice way to settle the debt - Steve and Zaza give him $30m and off he goes!
if Hope has appointed his own people does that mean that they become the license holders as Directors of FRCC? Appreciate we have moved the asset but I’m working on worst case scenarios ie. asset is transferred back.
Actually ignore my rant - reading Champs on II it appears we did include judge Ks appeal comments but Seeborg has not mentioned them. I share the champs feelings......
Thanks Ears for the reply, but I still don’t understand why FRR wouldn’t include that in their summary - if I was their lawyer that’s the first thing that gets written down on the statement as it is saying from one legal jurisdiction to another ‘hang on a minute there might some stuff here that makes me rethink my first judgement’. What possible reason could FRRs legal guys not have for including that?. We are way past the point of holding anything back till court arent we?
Reading SNs response if I have it right, we have until 29 May to return the declaration of solvency, which contains a statement that allows us to state all debts plus interest can be repaid within 12 months. Assuming it is signed I have two questions for anyone with liquidation experience in Caymans!:
1. Does that mean no further steps can be taken by the liquidation team until 29 May (or earlier if the solvency declaration is returned earlier)?
2. If the declaration of solvency is signed does that give us the opportunity to go in front of court and put our case forward for how the debts will be repaid within 12 months? And if the court sees there is a plan does that buy us the time to (attempt to) execute the plan?
If the answer to both questions is yes then I feel a bit better as we can then demonstrate over a 12m period to all those concerned that without the shackles of OMF we are able to put in place financing, grow our business and repay outstanding debts.
So my reading of the Judge’s TRO summary is that he sees it the same way as Kawaley did initially - he also makes no reference to K’s follow up remarks about ‘likely chance on appeal’ or whatever it was that got us excited a few weeks back - that’s suggests he either hasn’t seen that document (seems strange) or we misinterpreted what the ‘likely chance of success’ statement meant?
I’m also reading it that FRF have until 20 May to provide info to the court that gives Seeborg food for thought ahead of 6 June hearing - if we don’t then the 6 June is a replay of the TRO hearing as his comments in the TRO summary state they are one and the same. I am trying, and failing, to find anything positive in the Judge’s summary. What is also worrying is that our expensive legal team appear to be putting up applications which stand no chance of success or even meet the standard of being assessed. I’m struggling st this stage to understand any reason for continuing with this - we can’t have any aces up our sleeve or we would show them by now, so it has to be a delaying tactic. Is that now redundant as well given that liquidation proceedings have commenced?
I’m flummoxed to be honest - the summary is about as one sided as you can get.
I don’t use Facebook but I hint I recall someone saying there was a Frontera Georgia group? Is it worth reaching out to them to see if they can shed any light about ongoing operations - As in the day to day grind of getting up and going to work for FRR In Georgia - maybe a bit premature but if the liquidation is in full swing then these guys would be getting stood down/told not to come to work etc wouldn’t they? That sort of stuff wouldn’t stay quiet for long on social media surely?
Q2 2018: we couldn’t even get a 3m injection of cash from a hedge fund.
Q2 2019: in discussions with a lender for a 150m credit facility.
Something big has happened in that 12 month period - barrels and barrels of something big I reckon
Hi Gary
Thanks for the info - maybe it’s a delaying tactic to secure the funding, who knows! But agree that on the face of it what FRR has done appears to contradict the mortgage agreement. They are paying some hefty legal fees so there must be something here that has allowed the legal guys to approve it. Small print of the small print?