New York and Johannesburg listed Erin Energy Corporation which legally filed for bankruptcy last month has now filed a notice of removal against South Africa’s Public Investment Corporation (PIC) at a US district court in southern district of New York.
BusinessDay communicated with Erin Energy’s lawyer Mathew Okin who noted that Erin and its subsidiaries seek to reorganize their assets and liabilities in pursuant to chapter 11 of the United States Bankruptcy Code.
Erin Energy’s lawyer also maintained his client position in the litigation pending in New York state court that PIC wrongfully interfered with Erin’s loan obtained from Mauritius Commercial Bank (MCB).
“The interference by PIC in the MCB loan prevented Erin from paying many of its legitimate creditors and caused much of the current financial distress experienced by Erin,” Okin told BusinessDay.
“We removed the state court lawsuit to federal court because the claims relate to the pending bankruptcy in Houston, we will filed a motion yesterday with the New York federal court asking that court to transfer the lawsuit to Houston in order to have the Houston Bankruptcy Court preside over that lawsuit,” Okin told BusinessDay by Email.
The case which is under Judge Denise Cote at the New York state Supreme Court, country of New York with code 650436-2018 was filed on Thursday last week as U.S. court section 1446(b)(1) provides that notice of removal must be filed within “30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading .”
“We believe the Houston Bankruptcy Court is most familiar with the facts and is the court best able to efficiently handle the litigation,” Okin from Texas based law firm told BusinessDay.
Notice of removal in court is the changing of a legal case from one court to another, as from a state court to federal court or vice versa based on a motion by one of the parties stating that the other jurisdiction is more appropriate for the case.
“Normally Erin Energy has the right to choose the court where he or she will commence an action; However in many non-compete and trade secret cases, a defendant may for a variety of reasons prefer to be in federal court over state court,” a Lagos based lawyer told BusinessDay.
Erin Energy filed for bankruptcy last month as it seeks to restructure its debt and regain financial viability, as Allied Energy Plc and Camac International Nigeria Ltd founded by renowned Nigerian-born industrialist Kase Lawal who is also current chairman of Unity National Bank, the only black-owned bank in Texas USA hit the centre of controversy surrounding Erin’s demise.
Despite being on the edge of bankruptcy, PIC investment committees headed by then chief investment officer Dan Matjila now CEO handed Erin $270-million in 2014 and took a 30 percent stake and a seat on the board.
After the deal, Erin bought what it called the “economic rights” to Nigerian oil mining licenses 120 and 121, which included the productive Oyo oil field owned by Lawal and his family. However Oyo oil field turned out not to be as productive as forecasted as Erin shareholders sued CEO and certain directors of Erin over the deal.
The shareholders claims the CEO of Erin Energy overpaid by almost $200 million in Oyo Field deal that also benefited Allied Energy, another company controlled by Lawal.
The shareholder’s also claims that certain directors failed to protect the negotiations from the CEO’s undue influence and then sent out the transaction proxy which misleadingly portrays the deal process as pristine.
Erin’s loan was finalised in January 2017, and it pledged its assets as security essentially the oil rights that were ultimately owned by Camac which implies that should Erin not be able to repay the loan, and should the oil well happen to be locked up, the banks could ultimately turn to the PIC for the cash.
All attempts by BusinessDay to get Erin Energy side of the story prove abortive as the company refused to respond to emails forwarded to the email found on their website.
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In April this year, things turned from bad to worse for Kase Lawal as two Cayman Islands court representatives requested all recorded information relating to the company’s property or financial affairs from the Southern District of New York.
The two liquidators want to get to the bottom of the dissipation of nearly $1 billion of assets held by CAMAC’s subsidiaries. The liquidators noted that CAMAC’s two indirect subsidiaries Allied Energy Nigeria and CAMAC International Nigeria (CNIL) transferred shares they held in American junior Erin Energy, of which Lawal was CEO from 2011 to 2016.
Lawal, founded the Camac Group in 1986 originally exporting American tobacco to Africa. He soon scored a lucrative oil contract in Nigeria worth 55 000 barrels a day in 1999.
