Vantage lawyers insist on selling properties of Bitature to recover U$34mln

KAMPALA– The battle to attach and sell some of the properties belonging to business mogul Patrick Bitature continues, Robert Kirunda whose law firm represents South African lenders- Vantage Mezzanine Fund II Partnership, has said.

Bitature’s properties that could be auctioned after failing to pay back a loan his Simba Properties Investment Company Limited [SPIC] borrowed in December 2014; are; Skyz Hotel, Elizabeth Royal Apartments in the upscale Kololo and Moyo Close Apartments in Bukoto, all located in Kampala.

Kirunda’s law firm, M/S Kirunda & Wasige Advocates has given Quick Auctioneers and Court Bailiffs a job to look for buyers as per the May 18, 2022 advert in the newspapers to recover from US$ USD 34mln [about Shs122.4bln], saying Vantage regulated in South Africa has the right to recover its money.

“The Simba Group and Mr. Bitature have not paid a single cent of their indebtedness under the loan. The result of not servicing any interest, compounding over seven years, is that the indebtedness has ballooned to over US$34,000, 000,” says Vantage in a public statement published on April 23, 2022.

The auctioneers in the newspaper advert gave a 30-day notice from May 18, 2022, to put Bitature’s properties under the hammer, or private sale, unless the businessman pays the entire outstanding loan balance and all related costs.

Bitature, who is also proprietor of Simba Telecom Limited, Linda Properties Limited and Elgon Terrace Hotel Limited, acquired the loan from the South African lenders to boost his business empire that had failed to get funding domestically. The money was to pay part of his existing debt as well as funding the building of Skyz Hotel in Kampala.

Mezzanine financing does business via debt and equity financing, which gives the lender the right to convert the debt to an equity interest in the company in case the borrower defaults.

Even though Bitature has defaulted on his loan, he has denied the lender opportunity to have equity in the businesses, as well as refusing an opportunity to restructure his loan, saying Vantage is not registered entity in Uganda.

Loan ‘illegal’

In a statement issued Wednesday, Bitature’s lawyers-Muwema & Co Advocates accused their counterparts of M/S Kirunda & Wasige Advocates of what they referred to as misguided and unprofessional conduct by putting Bitaure’s properties on sale.

Counsel Fred Muwema added that putting up Bitature’s properties for sale “undermines the authority of the courts of law to adjudicate disputes between parties and is also in blatant disregard and contempt of court orders”.

Muwema claimed that the legal dispute their client had with the South African lenders was settled on May 9, 2022 when High Court Judge Justice Musa Ssekaana ruled that Vantage Mezzanine Fund II Partnership was not duly registered as a partnership in Uganda and, therefore, lacked a legal identity to sue or be sued.

“We wish to inform the general public that the said advert has been issued without any legal basis. It is a malicious advert whose sole purpose is to alarm and cause irreparable damage to our client’s business reputation,” Muwema said.

Bitature on his Twitter handle on Wednesday evening: “I urge you to disregard the fake news [about planned sale of his properties]. This attack is intended to cause reputational damage. The laws of Uganda have been upheld and none of our properties [is] for sale.”

Vantage not deterred

However, according to Vantage Capital, Bitature and his Simba Properties Investment Properties Limited (SPIC) has not paid a single cent even though the repayment debt of December 2019 elapsed.

“Vantage will not be deterred by the Simba Group’s and Mr. Bitature’s continued abuse of court processes and public institutions, nor by their recent “PR Campaign”, in their ongoing efforts to avoid their creditors and lawful obligation,” Vantagesays in a public statement, warning that investors in the fund are major international investors of repute, including several European development finance institutions, African pension funds, as well as development banks.

Vantage has castigated the High Court’s decision that it is not a registered body corporate in Uganda and therefore has no right to sue or be sued, much as the same court said that if Vantage was a registered entity in Uganda, it would have ruled in its favour to compel Bitature to pay the loan he so badly needed to complete his business activities.

Vantage says Bitature’s behavior has negatively impacted Uganda’s international image. “The behavior of Mr. Bitature and Simba Group of borrowing money from international lenders and then denying its obligations does not reflect well on Uganda’s international image as an investment destination,” Vantage says.

Bitature alongside his three other companies, Linda Properties Limited, Elgon Terrace Limited, and Simba Telecom Limited signed the loan agreement and guaranteed the loan and provided securities for the loan.

Vantage says Bitature has tried to doge paying a loan before, including trying to dodge a loan given to him by an unnamed South African bank.

Loan not illegal

In 2019 Bitature run to court under HCCC 988 claiming that the loan was illegal and that he signed it under duress, which the court did not agree with after Vantage filed miscellaneous application 201 of 2020, which court based on to dismiss Bitature’s ‘baseless suit’ and related court orders.

What Bitature said after signing the loan

After signing the loan agreement in 2014 on behalf of his company, Bitature issued a press statement in December 2014 saying, “Vantage brings an important and exciting new model of financing to the East African region. Simba Group is pleased to have found a strong mezzanine financing partner who provides medium-term growth capital.”

Why Bitature made U-turn on loan borrowed

Now Bitature and his lawyer Muwema now maintain that Vantage, among is not legally registered entity in Uganda and it lent Bitature the money without a licence. This they argue contravenes the Financial Institutions Act 2004.

Despite the legal arguments, Bitature had accepted an arbitration process, which he later on wanted to jump out, which High Court judge Boniface Wamala on June 16, 2021 ruled that Bitature had not been disadvantaged in the process since he was well and independently advised by senior and prominent legal professionals in Uganda.

“Faced with such facts, my view is that a feeble claim of duress and/or undue influence of the nature as this one amounts to an insult of own intelligence on the part of the Respondents and their advocates,” he ruled.

“Having found that the impugned arbitration agreement exists, is valid, operative and capable of being performed, and that there is an arbitrable dispute between the parties herein, it is ordered that this matter be and is accordingly referred to arbitration in accordance with Section 5 of the ACA. Accordingly, Civil Suit No. 988 of 2019 and all legal proceedings and orders thereunder are dismissed and/or vacated, or set aside, by the Court. Costs of this application, of HCCS No. 988 of 2019 and the proceedings thereunder are awarded to the Applicant against the Respondents [Bitature],” he ruled.

“I find this claim by the Respondents […Bitature ] escapist and unserious. This is more so because this court is in position to take judicial notice of the fact that the persons behind the Respondents, particularly the third plaintiff in the amended plaint (Bitature), are some of the most polished and astute business professionals there are in Uganda. The Respondents were well and independently advised by senior and prominent legal professionals in Uganda. Faced with such facts, my view is that a feeble claim of duress and/or undue influence of the nature as this one amounts to an insult of own intelligence, on the part of the Respondents and their advocates.”

Bitature’s case akin to Kiggundu versus Diamond Trust Bank!

Aside Bitature’s scandal, businessman Ham Kiggundu of Ham Enterprises is involved in almost a similar Shs120 billion case whereby he does not want to pay a debt owed to Diamond Trust Bank Uganda and Diamond Trust Bank Kenya, reasoning that the two sister banks illegally gave him a loan, as Diamond Trust Bank Kenya is not a legal registered entity in Uganda.

However, Bank of Uganda which supervises financial institutions in the country said it did not see anything wrong with the transaction between Kiggundu and the two banks as it was an arranged loan, a practice done internationally in the money markets.

Member banks under the Uganda Bankers’ Association [UBA] still insist there was nothing wrong with the syndicated loan, adding that about Shs 7 trillion loans in Uganda are syndicated as banks bring in capital from foreign countries.

Some of the public reactions to the matter

Philister Akec, a legal advisor replied:  “Anyway, people like Patrick will say lots of things in books, media interviews and commencement speeches. But if you really want to know how they got to the “top,” you only have to take keen interest in the fights for which they engage some shrewd lawyers.”

Apollo Joseph Murumbu, a tax consultant said: And interestingly he points out that Ugandan laws have been upheld. How about the laws of the country where the loans were obtained! This appears to be another HAM scenario of obtaining loans outside the country and hiding under our “for sale” legal structure.”

https://thecooperator.news/court-to-pass-judgment-on-uganda-cooperative-transport-union/

Buy your copy of thecooperator magazine from one of our  country- wide vending points or an e-copy on emag.thecooperator.news

Views: 3