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?
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?
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.
What should be Bank 2’s best possible course of action to realize the outstanding liabilities of Company 2in the circumstances stated above?
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.
For: “The Lawyers & Jurists”