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Legal Developments in the US

lse:frr

#1

https://www.docketbird.com/court-cases/Outrider-Master-Fund-L-P-v-Nicandros-et-al/txsd-4:2019-cv-02714

It appears that Zaza+SN together with OMF have jointly submitted a request for a ‘Protective Order’ in the Texas case. This order is designed to prevent any ‘public’ disclosure of certain information to be discussed either in writing or orally during the Texas hearing [7th January 2020]. More importantly it could be related to information uncovered from the Discovery Order that was granted to FRR in the California Fiduciary case in May.

For recollection, worth reminding that the Texas case was initiated by OMF against SN & Zaza for liquidating their personal guarantees issued to OMF for the payment of the US$2M coupon that was due on the CLNs in October 2018.

So [to me] it seems crunch time has arrived for our two guys, its either pay up or to shut up. By this I mean that our guys will either have to hand over US$2M under their guarantees or to dish out the dirt on Hope [within the confinements of the 4 walls of the court].

So, what ‘dirt’ do SN+Zaza have that they are requesting a ‘Protective Order’?

Well, in the original Fiduciary case, FRR alleged that Hope had been involved in market manipulation and illegal interference with the NOMAD.

At that time, we speculated that perhaps Hope was involved in huge forward selling of FRR shares that he was pretty confident of getting from SN+Zaza as FRR did not have the money to cover the interest payment. During late Sept and Oct 2018, we observed massive abnormal trading activity in FRR shares, with huge numbers were being sold in a rising share price [up to 800million in a space of 5-10 trading days]. Some probably related to YA as they were also expecting to receive shares for Sept installment which was paid in cash by FRR and separately the two renegotiated the terms of the SEDA loan - incidentally no news on that front means FRR repaid the US$2.1M which was due in July 2019.

Anyway, the Discovery Order gave FRR the legal right to ask YA if they had acted on behalf of Hope to forward some of these shares. It will also allow Jo Turner (NOMAD) to provide a statement whether Hope illegally interfered with his duties by pressurizing him to release some info in to the market.

Whatever the case, January is going to be an important month and PERHAPS the beginning of the end on all these legal cases… a conclusion to the Arbitration, an out of court settlement to the CLNs with Hope, jettisoning the Fiduciary case, employees getting paid, conclusion to the farmout agreement or financing agreement.

Who knows……. and who knows how much oil is being produced from the 3 wells we [the shareholders] financed: on T45, Dino-2 and T39. Lights might be on but workers not getting paid is not a good sign either.

As a big fat bloke dressed in red normally says during these times………Ho, Ho, Ho - Merry Xmas.


#2

Who knows indeed SB but i hope you are right ref: some sort of closure however this is FRR so probability has to be more of the same i.e. no information and it just drags on with PI’s trying to unearth any tit-bit of info.


#3

SB - A slight correction. The protective order was issued for the California case, not Texas. The latest news from California is that two more attorneys have registered to join FRR’s recently new representative in the courtroom there. Both are from Texas, and one of them is FRR’s chief rep in his home state. Not sure how he’s going to deal with both cases!
Things seem to be hotting up.


#4

qed - please click the link I posted in my first post, its definitely relating to the Texas case and a joint motion for a Protective Order :

Outrider Master Fund, L.P. v. Nicandros et al
Court Docket Sheet
Southern District of Texas

Anyway, you are right that there are a few more entries on the Cali cases where FRR has now submitted names of their new counsel. Again, as a reminder, our previous lawyers resigned in the Cali case as FRR’s offer to withdraw the case “without prejudice” was declined by OMF. So, as the legal process continues, FRR had no option but to appoint new counsel.


#5

Yes, SB, you’re quite right, it was Texas. My apologies.


#6

So with sunglasses on:

  • a deal has been done/is being done re Block 12
  • Hope is aware of it
  • the deal is dependent on a number of factors - but FRR retaining control is one of them. And Hope recognises this
  • So Hope is now arguing for his share of the outcome

With sunglasses off:

  • this is now a battle over egos, reputations and minimising personal liabilities

Despite having mentally written this off - just for peace of mind - I keep coming back to the empty box issue. Why oh why would the two parties fight so hard and for so long unless…

Seasonal greetings to one and all


#7

Did someone say Sunglasses?

From my experience of Yanks, ego and reputation override everything! Having (I imagine) built up a not unsubstantial legal bill already, accruing more by the day, at this stage I’d be fighting pretty damn hard to ensure I could walk away with a clean slate let alone anything else.

If both parties know that a deal is there to be done, why slug it out in court? when you could both walk away, put your own PR spin on it and pocket a large amount of $$!! How long before the legal bill overtakes the $2m owed to OMF?

Sadly, I think they’re fighting to climb out of the ‘empty box’ not over the contents…

Just the rambling of a befuddled mind…

Happy (delisting) Anniversary and a Merry Christmas, at least Santa brought me a nice 30% profit in Tullow this week!!


#8

[quote="Devex
You write
mentally written this off
And
How can you also act in good faith represent the FRR shareholders???


#9

In my mind very easily - one judgement is with the heart and the other with the head

Up to others to decide how they feel about it


#10

With Devex his judgement is differentiated between brain and heart , I think yours is between arras and elbow.


#11

funny :joy::joy:


#12

I as invested @FRR
Zaza has mislead everyone “telling too many LIES”
1)Xmas presents
Well Zaza planed all this many months before we got delisted.

Head v Heart =You got to balanced


#13

Hic
Try some more water with it pal :tumbler_glass:

Merry Christmas everyone
And a Happy, Healthy and Prosperous 2020
May the black swan swim up our road and tickle us all to death

Cheers/yamass/sleanche/prost/dosnrovnia/salut


#14

Rambo,

The fat lady is still to sing her final song. You never know bud.

Col Trautman


#15

Well, some movement in the Cali case as a ‘joint management case statement’ was submitted yesterday. So what’s important about that? Well, it’s ‘joint’ meaning that both parties have agreed on something. Remember last November, FRR had offered to withdraw the Fiduciary case provided it was done on a ‘no prejudice’ basis, which Hope/OMF rejected. Perhaps it relating to that. Perhaps they have agreed to some basic terms to withdraw the case or come to another agreement? Timing is also interesting as the Texan case is being heard behind closed doors next Tuesday. Plus all the drama/uncertainty around the arbitration and unpaid workers wages. If Hope was smart, he should try to do a deal with FRR on the CLNs and try to recover whatever he can, noting he only paid 25 cents to the dollar. Unfortunately I couldn’t download the document from the below link.


#16

With gratitude to ‘Earsbern’ from LSE BB who has managed to download the doc and essentially it is an agreement for the timetable for the Jury trial. Originally it was anticipated that the trial would be in July but it will now kick-off in early November. Again, worth remembering that this is a case relating to the breach in Fiduciary Duties by a company Director brought by FRR, which FRR offered to withdraw if OMF agreed to it being without prejudice. Anyway, seems this is likely to go all the way now and the bitterness from both sides does not appear to be subsiding. Why? Probably stems from the fact that the PSA was moved to another company, cheating Hope of the collateral (and who can blame him for taking it ‘personally’). Next stop Texas where the two Directors are personally on the hook for the coupon payment of $2m(not sure if their PGs covers the entire debt, in which case it will be $30m plus). Worth also remembering that the obligor under the CLNs is FRCC, which is in official administration so whatever assets that company had, first needs to be liquidated before they chase up the g’tors.

Anyway, it seems to me that the resignation of the previous legal counsel probably related to unpaid fees (why else would they turn up their nose to a case like this? It’s easy money for the lawyers even if the case looks weak).

With respect to unpaid wages, well, this may be a tactic to put pressure on the liquidators as its their responsibility to cover the operational costs of FRCC’s sub, FEGL, where I assume the employees are registered.

Legal timetable:

Expert Designation: 15/06/20
Fact discovery cut-off 14/07/20
Expert discovery cut-off: 28/08/20
Motion cut-off: 13/10/20
Final Status Conference: 19/10/20
Trial Date 09/11/20


#17

Cheers SB.

The most important aspect of all these shenanigans is of course the arbitration so everything crossed for a successful outcome on that front. I remember Zaza allegedly mentioning mid Jan until the “crises” is over so maybe just a few more weeks until news breaks.


#18

Yes agreed Fozzer. The critical issue surrounds the PSA terms and length. The fact that legal battles rage on with Hope surely this is an indirect verification that the PSA was ‘slid’ out of FEGL to a new entity. Worth also saying if GG has indeed taken a direct 50% share in the new entity where the PSA is housed, it means they have indirectly shaved off 50%of the cost recovery pool I.e $150m.

January remains a critical month. Grant a new 25-yr PSA, either new financing or farmout (or both) will be waiting to be signed off.

Interesting I noted Lekoil secured financing from Qatar Investment Authority for c.$184m 7-yrs @ 3.75%, so deals are getting closed.


#19

Have to say there is a piece of me that says the US court process is being mutually “managed” to a significant extent. Ie the Hope knows that any significant return is entirely dependent on the Arbitration outcome and the timing has been mutually agreed to give clear water here.

A positive outcome and Hope has a serious asset to chase. A poor outcome and it is about personal liability for SN and ZM - or Hope. I would be interested in a legal view here (Oopsi?) but as I understand it there has been mutual acceptance of non-disclosure of key elements - and that can only be a commercial angle - presumably the potential for a deal if the arbitration enables it. You have to think that the US court cases are therefore designed await the arbitration outcome - either as a fall back for Hope, allowing the window to get a commercial outcome and then press for a maximum return, or with FRR arguing that Hope was a part of the problem in the first place. Whatever - a commercial outcome from the arbitration process would I suggest enable an out of court outcome well ahead of the proposed court dates.

Our future now 100% hinges on the arbitration in my view. I think we need to park some of the rhetoric of the Georgian commentary - which can only be derived from sources within the Georgian Government. Remember - the proceedings are meant to be entirely confidential - so games are being played here, and I doubt if this will go 100% in one direction.

As others have said this is heading to a conclusion in the next few months - and we can only hope that the FRR lawyers are working very hard to counter the Georgian claims. The press leaks only give one side of the story - am sure there are counter arguments running behind the closed doors

The saga is edging to a conclusion


#20

Good luck to all shareholders.