4 new exhibits with the complaint
Exhibit EXHIBIT A - (“Enforcement Notice”),
Att: 2 Exhibit EXHIBIT B (Notice to Elmar Finance Inc.),
Att: 3 Exhibit EXHIBIT C (Collateral Agency Agreement),
Att: 4 Exhibit EXHIBIT D (Equitable Mortgage over Shares)
Can anyone access these.
4 new exhibits with the complaint
Just posted the summary of what these documents have been submitted for on LSE:
A very quick overview of what’s going on, and I’ll provide further detail on it later:
OMF have served an enforcement notice to Maples (Collateral agent on the mortgage document), and are seeking for Maples to take full control of FRCC. This was done on 17th April 2019, for the “default” in October 2018.
FRR have applied for:
“a temporary restraining order, preliminary injunction, and permanent injunction prohibiting Defendants from, among other things, interfering with any of Plaintiffs’ operations or replacing any of Plaintiffs’ officers, directors, or executives. Plaintiffs make the following allegations in support of their requests for relief.”
It seems to be exactly the same process as followed in the Caymans, where an urgent injunction was required, to stop OMF enforcing on the mortgage agreement.
Interestingly, FRR are still disputing whether a “default” even occurred. That if a default did occur, it was due to Hope and OMF.
This is absolutely nowhere near an OOCS.
What we need to find out, is what part of FRR the Block 12 license is held. As it stands, if FRR aren’t granted a restraining order / injunction, OMF will have the power to expel the management team of FRCC, and conduct a fire sale of it’s assets.
Will try and get further info on here later - sorry it’s not more positive!
It seems to be Caymans 2.0.
Absolutely essential that FRR get the injuntion / restraining order. Going by what happened in the Caymans, I’d imagine they’d be successful in getting this!
OK, so here we go, firstly what’s happened, what the docs are, and then thoughts:
FRR filed against Hope / OMF on Sunday, 14th April.
On 17th April - OMF / Hope, instructed Maples (the Collateral agent), that there had been a default (October 2018), and to enforce against the security. The security being all shares issued in the FRC subsidiary - FRCC (Frontera Resources Caucasus, as well as the ability to remove executive officers, and liquidate / sell the assets of that subsidiary.
A letter was sent to FIC from Maples (Enforcement Letter), confirming this. Another letter was also sent to investors part of the equitable mortgage document (Notice to Elmar Finance).
Frontera then amended their existing complaint, detailing the above, and as well as the relief sought in the initial claim, wanted it to include the following:
If the status quo is not maintained, and Defendants are allowed to
profit from their misdeeds, Defendants will likely take all actions necessary to
replace FRCC’s officers, directors, and executives, liquidate and tear apart FRCC’s
business, and conduct a fire sale of FRCC’s assets.
- All of these actions, if not enjoined, will result in immediate and
irreparable harm to Plaintiffs and their stakeholders. By way of example, if
Defendants succeed in breaking apart FRCC, this will cause irreparable friction
with the Georgian government that will have damaging impacts on Plaintiffs’
overall ongoing business and cause the host government to put Plaintiffs’ overall
business in the country at risk by causing immediate and substantial irreparable
harm to Plaintiffs’ goodwill and reputation for reliability in the industry. Moreover,
this action will create an improper appearance of non-performance that will serve
to impair Plaintiffs’ ability to work internationally in financial markets and with
Because Plaintiffs are in imminent danger of irreparable harm as a result of
Defendants’ latest, and most severe, steps towards dismantling Plaintiffs’
businesses, Plaintiffs file this First Amended Verified Complaint, and respectfully
request, in addition to the other relief they seek, a temporary restraining order,
preliminary injunction, and permanent injunction prohibiting Defendants from,
among other things, interfering with any of Plaintiffs’ operations or replacing any
of Plaintiffs’ officers, directors, or executives.
Thats where we are at. Almost the exact same position as we were when the Caymans court proceedings kicked off.
So, the burning questions for me:
There was an injunction in the Caymans Court, that stopped Hope from enforcing on the “default”. What has happened to that, and indeed, what has happened to the whole process in the Caymans?
Exactly what assets sit under the FRCC subsidiary, and how many shares are allotted to it. Is Block 12, included in FRCC?
HOW can a $2million default, allow Hope to potentially get his grubby hands on a $billion asset - there is absolutely no relativity to the debt owed VS the asset / damage Hope can cause.
WHY did Zaza / SN not just issue the bloody shares for the $2m interest payment.
OK, so burning questions aside, although tying into the relativity question. It’s highly likely that FRR will get their temporary restraining order, although, maybe not a permanent injunction. I think, similar to the Caymans, any judge will see that handing over the keys to a $multi-billion asset against a $2m default is not just or fair. Particularly a company that is a gate-way to the US - Georgia relations, with prime acreage, on a quite incredible prospect, that has already proven it can produce Oil and Gas.
Besides the obvious fight between Hope / FRR, there will be games of politics being played out, at Senior levels of Government behind the scenes. Is that another reason for the change to a US Court?
You can read and spin current happenings to whatever agenda you have. Quite simply, we don’t know who has the upper hand at present, if anyone.
It’s interesting that Outrider Onshore have now been named as a defendant, as well as this little excerpt, which ties into the politics piece above:
If allowed, these actions would irreparably harm Plaintiffs
and their stakeholders, including investors, employees, host governments in its
countries of operations (including the United States), and many of the ongoing
projects that would be sacrificed. In other words, if the status quo is not
maintained, Defendants will be allowed to pick apart Plaintiffs’ operations like
OMF is an entity formed under the laws of, and based in, the
Caymans Island. Nonetheless, all of OMF’s operations are controlled, in whole or
in part, by Defendants. In particular, Outrider is OMF’s Manager, and Outrider
Onshore is one of OMF’s feeder funds and is in a master-feeder relationship with
We can only speculate, but one thing is for certain, we don’t appear to be heading to an OOCS - yet.
I absolutely expect FRR to secure a temporary restraining order. That may well be the catalyst to an OOCS. Because lets face it, a Jury Trial is a complete lottery, and if it does go to a Jury Trial, one side will lose EVERYTHING.
Many thanks dmat22 - good capture of the information and much appreciated
Have to say I still stick with my “likely scenario” post on Saturday - albeit this really does feel like high stakes poker. The phrase “Defendants will be allowed to pick apart Plaintiffs’ operations like vultures” sort of confirms this - and the wording is in my view very much aimed at indicating the sort of argument FRR would put in front of a jury. Bad guy versus good guy. Opportunist v long term business investors. Self interest v the greater good. Etc Etc
The other thing that puzzles me (well one of the things) is that this is still all about events leading up to the “default”. No mention of the Durham proposal, or strategic partners, or anything to do with ongoing operations. I really do wonder if the provision of funding and partner support is dependent on FRR getting the loan note issue sorted first and foremost.
As others have said a trial by Jury is a fully binary bet - I will be amazed if it gets that far simply because a) neither party can afford to counter effectively utter oblivion, and b) neither party would want to bet on how a jury would respond.
Change of attitude from the big time investing experts here and LSE today.
People are starting to realise what an arrogant big mouthed dumb ass Zaza is, and how much he is going to cost them.
Sqeaky bum time suckers.
There is obviously no smoking gun evidence against Hope. Zaza has been playing a bluff to satisfy his ego and has been called.
prick you are a fool of the highest order.
Booster11 - you have gone too far this time, so I have taken screen shots of your posts and forwarded them to Zaza Mamulaishvili so he can have the opportunity to respond to you directly, perhaps, and hopefully across a different court room.
Its about time you realised your actions have consequences and slanderous commentary such as yours certainly requires dealing with.
Good luck and let us know when he contacts you, preferably via a lawyer.
I suspect he’s too busy right now, but I guess he has plenty of lawyers.
More court docs posted by investment boy on LSE, one a temp restraining order issued April 25th.
Update as follows:
Judge Reassigned, we now have: Richard Seeborg. Reasons for this, as follows:
CLERK’S NOTICE OF IMPENDING REASSIGNMENT TO A U.S. DISTRICT COURT JUDGE: The Clerk of this Court will now randomly reassign this case to a District Judge because either (1) a party has not consented to the jurisdiction of a Magistrate Judge, or (2) time is of the essence in deciding a pending judicial action for which the necessary consents to Magistrate Judge jurisdiction have not been secured. You will be informed by separate notice of the district judge to whom this case is reassigned. ALL HEARING DATES PRESENTLY SCHEDULED BEFORE THE CURRENT MAGISTRATE JUDGE ARE VACATED AND SHOULD BE RE-NOTICED FOR HEARING BEFORE THE JUDGE TO WHOM THIS CASE IS REASSIGNED. This is a text only docket entry; there is no document associated with this notice
Likely to be point 2, as FRR need the restraining order as a matter of urgency.
Also, FRR have confirmed there are no other parties that they are aware of, that need to be included in the case.
NOW ENJOY YOUR COFFEE READING THIS BIT:
Now, the good news and as I expected:
The Court, having considered the Motion for Temporary Restraining Order (the “Motion”) of Plaintiffs Frontera Resources Corporation and Frontera International Corporation (collectively, “Plaintiffs”), the opposition thereto, and having heard the oral argument of counsel and having found good cause to do so, hereby orders as follows:
- The Motion is GRANTED;
- The Court finds that Plaintiffs are likely to succeed on the merits of their claims for Breach of Fiduciary Duty and Duty of Loyalty.
- The Court further finds that unless a temporary restraining order is granted, irreparable harm will result to Plaintiffs.
- And, the Court finds that the balance of harms and the public interest favor granting injunctive relief to Plaintiffs.
Therefore, and with good cause shown,
Worth noting though, that doc hasnt been signed by the judge / clerk yet and is called a proposed order, so not 100% sure if that’s gone through.
dmat…great update and very reassuring indeed!
An interesting update from California, it appears Hope has now lost the initiative.
Dmat22 - I assume that Daniel1son (LSE) and you are one and the same?
Anyway - your work - and your commentary is hugely appreciated - many thanks. Plus others on LSE.
This roller coaster never ceases to amaze. So the balance of risk has now gone full circle - and for the first time the full logic of the fiduciary claim seems to make sense. So Hope could perhaps assume a technical win on the collateral agreement issues - but lose it all (and a lot more) on the fiduciary claim. As I have previously pointed out the FRR value is a sizeable chunk of the Outrider fund - which lost 25% of its value last year - and most likely has between 20 and 30 investors only. And almost certainly has very limited liquidity in addition to limited cash reserves.
Game on - so I still expect some form of settlement (unless Zaza and SN are going to go all out for the kill).
One and the same Devex!
And you’re more than welcome - it pales in significance to others, particularly in setting things like the FSG up, and collating Shareholders within FRR - which, could actually become increasingly important in the next few months, especially if FRR get a favorable outcome, which should set of a chain of events that will require Shareholder approval.
Us LTH’s are all in the same boat, and to be quite honest, I’m a bit of a control-freak, and having as much info as possible, positive or negative, helps with processing my investment.
It’s the “Hope” that kills you…or not in this case!
Good luck all!
Good work dmat 22. Seems to me that what we have here is a draft order and hopefully we will soon find out if it’s been approved and issued. Should be enough to concentrate Hope’s mind anyway so game on it is!
I find it incredible this document would use words like “likely to succeed” i mean that is pretty damning, would normally expect words like reasonable and possibility. This isn’t a standard format doc is it?
In my experience these orders are dictated by judges in chambers in front of counsel after having heard submissions and arguments from both sides.
Once the order has been dictated it is then submitted for formal submission and subsequent release on court headed/stamped (ie, official) paper to all parties concerned.
The difference here appears that we are seeing the interim process, ie, that part between the judges’ commentary and the formal issue of the order. To my thinking it is now merely a matter of time before this order is issued by the court and enforced. Depending on the speed it could be as soon as next week.
The most important point in the oder has got to be item 2: ‘Plaintiffs are likely to succeed on the merits of their claims for Breach of Fiduciary Duty and Duty of Loyalty’. It would be suicide to attempt to even contest that and I am hoping now this will bring matters to a close.
You’ve changed your tune. Remind me not to turn my back in your company
Good post from our lawyer Oopsi on LSE
Need to keep feet firmly on the ground for the moment, but also note his comments about the collateral agreement - I am sure most will not have spotted this. So again this explains the logic of threatening the fiduciary case to be heard in front of a US Jury - and how threatened Hope will feel about this.
Apologies for being brief but two quick points:
It’s easy to get carried away with the general euphoria (as did I this morning) at the moment but this needs to be tempered. Danie1son was right that this order has not been signed by the judge. I can’t tell from the documents whether a hearing has taken place for the injunctive relief. But it is part of the procedure for filing for injunctive relief that the party seeking relief prepares a draft order for the judge to sign (see below link). This appears to me what we have done and at this stage and no more. I really hope the hearing has taken place and the order just needs to be signed off on but in the absence of further documentation/evidence, I cannot make that leap. I sincerely hope someone else can help me do that. For what it’s worth, I think we will find out today or early next week at the latest.
Secondly, it is also interesting to note that the Collateral Agreement (Clause 7.13) specifically excludes a jury trial for any issues arising under that agreement. That is quite telling as it demonstrates a clear desire to stay away from this form of resolution. Of course the breach of fiduciary claims etc don’t arise from the above agreement and a jury trial has been deliberately chosen because it is the forum Hope least wants to be in. That appears to be a tactically astute move and it has certainly thrown the cat amongst the pigeons.