Judge rules that EDC can proceed with sale of Global ZS-OAK
A judge in the UK courts has ruled that the sale of Global 6000 ZS-OAK can now go ahead, after Export Development Canada (EDC) settled its litigation with Westdawn Investments.
EDC is Canada’s export credit agency.
EDC said in an August 2019 statement that it had loaned Westdawn Investments $41 million in April 2015 to help finance the acquisition of Bombardier Global 6000 MSN 9631 / ZS-OAK.
Westdawn Investments is a South African company that is owned by the Gupta family, the wealthy Indian-born South African family with interests in computing, media, and mining and whose members who are under investigation for misappropriation of large amounts of state assets have fled the country. They have refused to return to face court hearings and to participate in criminal investigations.
However, the aircraft was leased to Westdawn by Stoneriver MSN 9631 Aircraft Designated Activity Company, a Special Purpose Vehicle (SPV) registered in Ireland.
EDC’s statement notes that in the months and years following its decision to provide Westdawn Investments with the loan, allegations that the Gupta family had been involved in corruption and political interference in South Africa arose.
According to EDC, it ended its business relationship with Westdawn Investments in December 2017, after Westdawn Investments defaulted on its loan in October 2017.
In South African court papers acquired by Corporate Jet Investor dated February 15 2019, EDC claims that Stoneriver failed to make a contractual quarterly payment on October 16, 2017.
EDC adds that by October 18 2017, when the payment had still not been made, a notice was sent to Stoneriver telling it that a non-payment default had occurred, and that should the payment not be received by midnight on October 19, an event of default would occur.
In the event of default Stoneriver would have to contact Westdawn to notify it of the default and that it was terminating the lease of the aircraft.
Stoneriver sent the notice on October 20. Westdawn responded on October 27 saying that it had made the lease payment by the time the default notice was received on October 20.
EDC decided to withdraw the notice but contacted Stoneriver to request information and confirmations from Westdawn, which was well within the financier’s rights and set out in the original financing agreement. During November and December 2017, a number of further defaults occurred, including Westdawn not providing the requested information.
Following EDC’s decision to terminate its relationship, Westdawn Investments then began litigation in the UK, contesting the termination.
The South African court case was brought by EDC following the series of missed payments.
In March 2019 the South African judge ruled that the aircraft must be returned to South Africa within 15 days of the ruling. If the aircraft did not return to South Africa within the specified time period, the judge ruled, at the request of EDC, that the South African aircraft registration authorities should deregister the aircraft, effectively making the aircraft unflyable.
Reports from South Africa say that ZS-OAK arrived at Johannesburg’s Lanseria airport during the night of April 12, 2019. It has been parked there since arriving.
EDC says that it has now resolved its litigation case in the UK, and that Westdawn Investments has now agreed to the legal steps that EDC started in December 2017 to end its business relationship.
“The settlement of the litigation is a significant milestone towards bringing this matter to a full conclusion. Importantly, it clears the way for a straightforward process for us to sell the aircraft,” stated Carl Burlock, executive vice-president and chief business officer, EDC.
According to EDC it has been maintaining ZS-OAK at Lanseria Airport since its arrival back in South Africa in April 2019. It also says that a South African judge agreed that it could begin marketing the aircraft for sale in December 2018.