VICTORIA, Seychelles (eTN) – In the Supreme Court of Seychelles, on 23rd July 2008, Acting Chief Justice A. Ranjun Perera refused to “stay” the winding up process in the case of Ailee Development Corporation Limited, owner and operator of the Plantation Club Resort, to prevent the liquidators, Ernst & Young LLP of Mauritius, from being able to sell the assets of the hotel company before the Court of Appeal hearings have taken place. This is despite the fact that the date set for hearing the appeal of the company is set for August 7, only two weeks away.
The application to the court was made under section 233 of the Companies Act, which allows the Judge wide powers to grant a stay of the winding-up proceedings on any grounds, which he feels equitable.
Apart from having given only 31 days, from the date of the ruling for liquidation, to the close of the tender offer, the liquidators also imposed certain abnormal conditions in their “Invitation to Tender,” which the secured creditors and shareholders believe seem to be intended to deter as many bids as possible, thus making it easier to ensure that a pre-designated chosen party can acquire the hotel.
Deputy Attorney General Ronny Govinden, who has represented the government of Seychelles throughout the liquidation case, argued before the court that the applicant for the stay, Nortlake Limited, the largest shareholder of Ailee Development Corporation Limited, owning a fraction under 50 percent of the company, being a foreign company, should not be allowed to petition, and tried to have the court reject the affidavits of its directors.
This application for the stay of winding-up proceedings is brought against the liquidators Ernst & Young, who could have appeared in court in opposition to it, and not against the government. Therefore, Deputy A.G. Govinden had no legal business in arguing this case. This improper involvement in the hearing and the Attorney General’s office hostility towards the shareholders’ application to stay the proceedings is seen by the company and its attorney, Mr. Bernard Georges, as further evidence of their belief that powerful elements within the government of Seychelles are engineering the liquidation, so that the hotel can be handed to their chosen party.
As with his previous ruling, when he ordered that the company be put into liquidation, Judge Perera’s latest ruling contains several factual inaccuracies. Apart from this, in his judgment, Judge Perera pointlessly cited the case of “A.B.C. Chewing Gum Limited,” to support his case, which has no relevance to the present case, and which the judge himself stated, in the same paragraph of his ruling, that it did not “arise for consideration.”
The shareholder claimed that if the liquidation and sale of the hotel were not stayed beyond the 24th of July, when tenders were to be opened, that there would be significant danger to interests of creditors and shareholders, as the hotel could be sold before the appeal was heard. The judge cited in his ruling that the “Invitation to Tender,” which was published in The Nation newspaper, required bids to be valid for three months, and that this showed that there was no danger of the assets being sold before the Appeal hearings. This argument has no basis in law and missed the point that there was nothing stopping the liquidators from selling the assets of the company at any time after tender offers have been opened.
The creditors and shareholders had, prior to this ruling, requested that the Official Receiver intervene to examine the conduct of the liquidator, as many statutory procedures had not been followed and the liquidator had not taken required actions, before they commenced the process of selling the hotel.
Shareholders representing 91 percent of the company and all of the secured creditors do not want to see the liquidation go through as it is being conducted, as the shareholders fear the total loss of their hotel and the creditors fear that the tender process will be manipulated to defraud them of their proper dues.
Mark Davison, managing director of Ailee Development Corporation Limited, said: “We continue to be convinced that this process will be teamrollered through by those elements of government who have orchestrated it, to ensure that the Hotel is acquired by the government’s chosen party, without us having recourse to any defense or protection whatsoever.”
The business community has been shocked that Judge Perera chose not to delay the sale of the Plantation Club Resort until the Seychelles Court of Appeal hears the case and give the final ruling on the country’s largest resorts saga. Foreign company representatives have also reacted with confusion on the argument brought about in the case where it was stated that as the main shareholders of the Plantation Club Resort’s owning company was a foreign company, they should not be allowed to petition for the “stay” of the winding up proceedings and sale of the resort.