Re Alloy Aircraft Ltd; Al-Ayed v Mitchell and Alloy Aircraft Company Ltd

• Jurisdiction: Bermuda
• Judgment Date: 13 September 2005
• Date: 13 September 2005
• Docket Number: Companies (Winding-Up) Jurisdiction 2005 No. 106
• Court: Supreme Court (Bermuda)

In The Supreme Court of Bermuda

Kawaley, J

Companies (Winding-Up) Jurisdiction 2005 No. 106

BETWEEN:

Abdallah Ibrahim Abdallah Al-Ayed

Petitioner

and

Peter CB Mitchell (receiver and manager of Alloy Aircraft Company Ltd

Alloy Aircraft Company LTD

Respondents

Ms K Lomas for the Petitioner

Mr P Smith and Mr J Elkinson for the Respondent

Insolvency — Statutory demand — Disputed winding-up petition

Ex Tempore Judgment of Kawaley,J

Introductory

1. The Petition in this matter was issued on April 4, 2005 and is brought against the Company by an individual, Mr. Abdallah Ibrahim Abdallah Al-Ayed, claiming the sum of $15 million. He does so on the basis of a statutory demand having been made under section 162 (a) of the Companies Act 1981, having been served on March 1, 2005 and the debt not having been paid. The Petition also, in standard form, complains that the Company has failed to pay the sums demanded, has not indicated that there exists any dispute over the existence of a debt of the amount claim, and accordingly asserts that the Company is deemed to be insolvent.

The grounds on which the Petition debt is disputed

2. The Petition was opposed, firstly, by an Affidavit sworn by Mr. Peter Mitchell in this matter on April 26, 2005 and, secondly, by an Affidavit sworn by him on June 20, 2005. Both of those Affidavits exhibit a substantial number of documents but, in essence, the debt seem to me to be disputed on two broad grounds.

3. Firstly, the Receiver, who is in fact an officer of the Court having been appointed on February 26, 2004, expresses doubts about the genuineness of the loan agreement which forms the basis of the statutory demand, and does so on a variety of grounds. Those grounds include the absence of any record in the Company's records, in particular the Minutes, which make reference to the purchase of an aircraft which was supposedly linked to the loan, yet make no reference to the Loan Agreement. But, and perhaps in a more sinister fashion, concern is expressed that there may be some linkage between the Petitioner and the principals of the Company, against whom have been made various allegations-which I accept have probably not yet been substantiated-of fraud. And the suggestion is made that this entire Loan Agreement is in fact (or, putting it at its lowest, may be) a sham document. And therefore, it is said, there is simply no debt at all.

4. But beyond that, implicitly, doubt is cast on whether or not-if any genuine loan agreement was in fact executed according to its1 terms-the Company is in fact bound because there is no evidence presently available to the Receiver to suggest or indicate

that the loan was either authorised by the Company or that the Company received any benefit therefrom.

5. Now the Petitioner filed various affidavits including the affidavit of the Petitioner but Justice Bell at an earlier stage in these proceedings ruled that that Affidavit should not be relied upon unless the Petitioner gave oral evidence. He was unable to attend today due to ill health, according to a medical certificate submitted to the Court and which, at the request of the Respondent, was admitted in evidence as Exhibit 4. And so instead, the Petitioner relied wholly on the evidence of two witnesses who had also filed affidavits in their own right, but who were available for cross-examination. Those witnesses were firstly, Mr. Ali Al Betar, the Petitioner's attorney and secondly, Mr. Ali Turkkan, who is an accountant and a former consultant employed by Mr. Hakan Uzan, one of the principals of the Company. But since Mr. Uzan or the Uzan family's difficulties, Mr. Turkkan has been employed, according to him, on his own account.

6. Both of these witnesses testified, it seems to me, that Exhibit 1, the copy of the Loan Agreement was a copy of the original Loan Agreement and that this copy came from the Petitioner himself. They further testified that they witnessed the signing of the agreement, both by the Petitioner and by Mr. Uzan on behalf of the Company, and that this happened on November 5 2000. And further they observed the payment of some U.S. $3 million in cash-and I believe that it was suggested that it came in...