8/2/11-Ethiopia: Commercial Bank Auctions Off Mam Trading Assets
The Federal Supreme Court has issued an order to freeze 11 million Br worth of Mam Trading Plc’s assets which are to be auctioned by the Commercial Bank of Ethiopia (CBE).
The order to freeze comes as part of a 43.6 million Br court battle against Mam Trading Plc along with its Director General Musema Aman, and his wife, Munaja Temam, in an effort to recover the non performing loans granted by CBE in 2009.
The high court passed an injunction order on several properties belonging to the defendants following the suit filed by CBE at the Federal High Court’s Ninth Civil Bench on June 21, 2010, for an amount of 43.6 million Br including interest, after deducting 17.6 million Br, which has already been paid.
The suit has named Musema and Munaja as the two signatories on a loan agreement amounting to 55.4 million Br.
Mam Trading Plc, which is engaged in the export of oilseeds and pulses, was established by Musema Aman, Aman Hassen and Mamit Bekele, in March 2001. The company, which started out with a capital of 2.2 million Br in 2001, registered 15 million Br in capital in 2008 upon renewing its business licence. It signed two loan agreements with the state owned commercial bank on March 31, 2009.
The two loans, worth close to 21.4 million Br and 34 million Br granted by CBE, were based on a collateral of immovable property worth 3.7 million Br, located in Humera, 902Km north of Addis Abeba, in addition to an insurance guarantee as collateral.
The first loan agreement was for the money borrowed to be used for the export of sesame seeds purchased from the local market. The second agreement, however, had amendments to the initial contract. They have agreed that an amount of about 1.5 million Br was to be paid every month, and the loan was to be paid in full on or before July 2, 2010.
On June 30, 2011, the bank applied for the injunction of the defendants’ property. As a result, the court gave an order to freeze the defendants’ shares in Mabruk Plastic Project Plc, Beza Construction Plc, Zak Plc, and Nib International Bank (NIB). The court order also extended to their export processing facility, office building, and warehouses located in Akaki Kality District; as well as a flower farm in North Shoa Zone, Oromia Regional State; and six trailer trucks.
Mam Trading had argued that it was not able to pay out the loan because the bank did not allocate additional loans at the time, which prompted the company to incur losses and had requested to pay out the loan without interest, also requesting for additional time.
However, the presiding judge, Habtamu Worku, rejected the claim and ordered Mam Trading and the couple to pay the rest of the 43.6 million Br with interest by February 24, 2011.
CBE applied for judgment execution on March 31, 2011, at the Federal High Court’s Eight Civil Bench through its lawyer, Addisu Duresa.
The bank, which has already sold a house and a warehouse, is pursuing additional assets belonging to the defendants, to collect the rest of the 35.6 million Br.
It is also targeting the defendants share at NIB, Beza Construction, Mabruk Plastic, Export Packing Machineries, commodities at the Ethiopian Commodities Exchange (ECX), and a flower farm located in North Shoa.
While the bank is pursuing the defendants’ properties, Zak Plc intervened during the litigation claiming 9.6 million Br from Musema, director general of Mam Trading, and the former manager of Zak Plc, for mismanagement during his administration.
Zak has requested that the Supreme Court freeze the sale of 173 shares at NIB until the a court pronounces a verdict on the company claims.
Following this application, CBE, has ordered to close the auction floor on July 18, 2011, until the court identifies which party has the right to collect its debts first.
CBE also appealed to the Supreme Court on July 30, 2011, for priority to collect its debts
Source: Addis Fortune (Addis Ababa)