Legal opinion regarding release of securities and updating data base with CIB of Bank 1 upon payment of the loan, A/C. Company 1

Mr. Z

Address….

Dear Sir,

Re:      Legal opinion regarding release of securities and updating data base with CIB of Bank 1 upon payment of the loan, A/C. Company 1, a borrower of our Barisal Branch and whether securities of Company 1 can be attached against liabilities of Company 2, a defaulting borrower of Agrabad Branch of Bank 2

We refer to your letter dated 23.12.2006 on the above subject.

We have perused your letter. We understand that Company 1, a borrower of Barisal Branch of Bank 2 (Bank 2) availed credit facilities from Bank 2 against securities inter alia, lien on 119230 share certificates of COMPANY 2 in the name of its 3 (three) directors, first charge of equitable mortgage on the land & factory building of COMPANY 2, first charge on the fixed & floating assets of the company with RJSC and personal guarantees of all the directors. Recently, COMPANY 2has adjusted its liability and requested Bank 2 to update data base of CIB with BANK 3. Some of the directors/shareholders of COMPANY 2 are also directors/shareholders of some defaulting borrower companies, i.e., Company 2, Company 3 and Company 4

In such situation certain queries have been referred to us. We have perused the queries referred to us. Our comments are given hereinafter.

Query No. a

Whether Bank 2 can retain the mortgaged property and fixed and floating assets of COMPANY 2Ltd. (since liabilities adjusted) against liabilities of Company 2 Ltd?

Query No. b

Whether Bank 2 can attach the above mentioned properties of COMPANY 2Ltd. and sell the same towards partial adjustment of liabilities of Company 2 Ltd? If yes what would be the procedure?

Our Comments:

We do not know whether COMPANY 2Ltd. has executed any Corporate Guarantee in favour of Bank 2 against the loan of the Company 2. If COMPANY 2Ltd. execute Corporate Guarantee then Bank can retain/attach the movable or immovable properties against liabilities of Company 2 Ltd which was charged/mortgaged by COMPANY 2in favour of Bank 2 against the loan of the COMPANY 2Ltd.

However if the director(s)/share holder(s) of the COMPANY 2Ltd who was/were the defendants of the Artha Rin suit filed by Bank against the Company 2in their personal capacity then Bank can attach their personal property including shares of the COMPANY 2Limited in the said suit.

Query No. c

Whether Bank 2 have to up date the data base of BANK 3 CIB clearing the name of Directors of COMPANY 2Ltd. though they have shares in defaulter Company Company 2 Ltd?

Our Comments:

Since COMPANY 2Ltd. adjusted their liabilities Bank have to up date the database of CIB clearance of BANK 3 in respect of the said account. However, name of directors/share holders of the defaulting borrower companies will remain unchanged in the CIB database.

Query No.d.

What should be Bank 2’s best possible course of action to realize the outstanding liabilities of Company 2in the circumstances stated above?

Our Comments:

In these circumstances best possible course of action would be to Bank 2 to vacate the stay order in connection of the proceedings of the Artha Rin Suit and then try to obtain decree against the Company 2.

Should you have any further query, please do not hesitate to revert back to us.

Thanking you.
 

Yours faithfully,
 

………………….

For: “The Lawyers & Jurists”

Disclaimer:

The information contains in this web-site is prepared for educational purpose. This site may be used by the students, faculties, independent learners and the learned advocates of all over the world. Researchers all over the world have the access to upload their writes up in this site. In consideration of the people’s participation in the Web Page, the individual, group, organization, business, spectator, or other, does hereby release and forever discharge the Lawyers & Jurists, and its officers, board, and employees, jointly and severally from any and all actions, causes of actions, claims and demands for, upon or by reason of any damage, loss or injury, which hereafter may be sustained by participating their work in the Web Page. This release extends and applies to, and also covers and includes, all unknown, unforeseen, unanticipated and unsuspected injuries, damages, loss and liability and the consequences thereof, as well as those now disclosed and known to exist.  The provisions of any state’s law providing substance that releases shall not extend to claims, demands, injuries, or damages which are known or unsuspected to exist at this time, to the person executing such release, are hereby expressly waived. However the Lawyers & Jurists makes no warranty expressed or implied or assumes any legal liability or responsibility for the accuracy, completeness or usefulness of any information, apparatus, product or process disclosed or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product process or service by trade name, trade mark, manufacturer or otherwise, does not necessarily constitute or imply its endorsement, recommendation or favouring by the Lawyers & Jurists. The views and opinions of the authors expressed in the Web site do not necessarily state or reflect those of the Lawyers & Jurists. Above all, if there is any complaint drop by any independent user to the admin for any contents of this site, the Lawyers & Jurists would remove this immediately from its site.