Ecobank Warns against Acquisition of Honeywell Flour Mills, Alleges Company Facing Winding Up Proceedings

Wale Igbintade

Following media reports on the move by Flour Mills Nigeria Plc to acquire 71.69 per cent stake in Honeywell Flour Mills Plc, Ecobank Nigeria Limited has issued a 7-day ultimatum to Flour Mills to desist from consummating the agreement on the ground that the company was hugely indebted to the bank.

Ecobank alleged that the debt owed by Honeywell had been a subject of litigation.

Ecobank in a statement issued by his lawyer, Kunle Ogunba, stated that consequent upon a press release circulated in several online publications and contained on Honeywell Group Limited’s website, there was need to caution members of the general public and corporate bodies on the danger inherent in dealing in any shares of the company.

Ecobank while narrating it’s interest in the company, stated that it advanced several loan facilities which included working capital to Honeywell Flour Mills Plc and that due to the failure of the company to liquidate the said loan facilities, the bank was constrained to commence winding up proceedings against Honeywell Group Limited at the Federal High Court, Lagos in suit no: FHC/L/CP/1571/2015;

Furthermore, Ecobank said Honeywell Group Limited, being the respondent to the winding up petition, objected to the jurisdiction of the trial court to preside over the suit, this the bank said was upheld by the trial court.

Aggrieved with the decision of the trial Court, Ecobank revealed that it had filed an appeal, with appeal No: CA/L/1041/2016) at the Court of Appeal, Lagos Division, adding that upon review of its case, the appellate court had found merit in the appeal, and held that the winding up proceedings against Honeywell Group Limited was properly commenced and that the Federal High Court had jurisdiction to hear the said petition.

Ecobank also explained that while the said decision of the Court of Appeal has been appealed to the Supreme Court, by Honeywell Group, the Court of Appeal’s judgment remains valid and subsisting till date.

The bank stated that the effect of the Appeal Court judgment was that there is currently a winding-up action/proceeding pending against the said Honeywell Group Limited.

Ecobank added that the provisions of Section 577 of the Companies and Allied Matters Act 2020 “CAMA” stated that “Where a company is being wound up by the Court, any attachment, sequestration, distress or execution put in force against the estate or effects of the company after the commencement of the winding up is void”

The bank said the estate of Honeywell Group Limited includes (but is not limited to) its 71.69 per cent stake in Honeywell Flour Mills Plc which it now seeks to divest to Flour Mills contrary to the express provisions of the law which prohibits the said sale/transfer or divestment during the course of the winding up proceedings.

It added that it was clear that the Honeywell Group Limited was legally estopped from disposing any of its assets pending the final determination of the winding up action commenced against it.

Furthermore, Honeywell Flour Mills Plc in which the shares are held is also currently indebted to Ecobank by virtue of the Court of Appeal judgment delivered on the 14th day of December, 2020 in appeal number: CA/LAG/CV/975/2019, wherein the Appellate Court held that the company did not repay its debt to Ecobank in line with the agreement of parties.

Consequently, the bank demanded that Flour Mills of Nigeria Plc in its best corporate interest immediately cease and desist from consummating the subject transaction which aims to divest the assets of a company being wound-up (Honeywell Group Limited).

“Please be further informed that the assets of both Honeywell Group Limited and Honeywell Flour Mills Plc. are the subject of the winding-up action and thus based on the doctrine of “lis-pendens” (in addition to the provisions of CAMA supplied above) you are advised to refrain from dealing with the subject asset which forms part of the subject matter of litigation,” the statement added.