Gitto Construction Dragged to Court Over N 4.2 billion Diamond Bank debt

Gitto Construction has had winding up petition instituted against it by Diamond bank due to the Italian firm’s refusal to pay a N 4.2 billion debt back to the bank.

The matter has been taken to the Federal High Court under the Companies and Allied Matters Act (CAMA) 2004 and in the application for winding up pursuant to sections 408, 409 and 410 of the CAMA Cap C. 20, laws of the Federal Republic of Nigeria and is praying the court to wind up the company because of its inability to pay the bank the sum of N4, 226, 970.246.58 being a cumulative debt owed to them.

Diamond Bank first granted the firm an overdraft facility and an invoice discounting facility totaling N650 million on October 25, 2004 in addition to a N1.0 billion revolving bonds/guarantee facility.

Eight months later,  the bank claimed that it gave another round of facilities to the company through an offer later dated June 24, 2005. The offers include N48, 879,120.00 bank guarantee facility, and N39, 103,296.00 vehicle lease facility increasing the bonds/guarantee facilities to N4 billion.

Diamond Bank said, “the purpose for the above facilities were amongst others to enable the respondent take immediate delivery of 13 units of Toyota vehicles from Elizade Nigeria Limited pending payment and to accommodate the respondents new request for bonds and guarantees for contracts awarded or being pursued by the respondent.”

The tenor of the facilities were 90 days for the bank guarantees, 18 months for vehicle leasehold, while the bonds were to mature along with the respondents existing N2.2 billion bonds and guarantee facility.

The bank also granted Gitto  a N255, 249,000.00 lease-in-process and a N255, 249,00.00 lease finance facility.

“The facilities were tenured for 90 days for the lease-in-process facility and 12 months for the lease finance facility and were granted to enable the petitioner re-finance the 80 percent exposure under the crystallised lease-in-process facility and also to establish a confirmed letter of credit on behalf of the respondent for the importation of one unit of dredging equipment worth 2 million Euros”, it stated.

Gitto was unable to meet up to its debt obligations at the expiration of their respective tenures causing the instruments to continue incurring interest and prompting the bank to issue demand letters requesting payment which Gitto has not been able to comply with.

“As a result of the respondents inability to fulfill its obligation to your petitioner, the indebtedness of the respondent to the petitioner as at April 19, 2012 was in the sum of N4, 226,970.246.58 and interest continues to accrue,” it claimed.