Lawyer Muwema says Patrick Bitature signed and got $10m loan by mistake as he and South African lender fight over $30m property
Quick auctioneers and bailiffs noted that M/s Kirunda and Wasige Advocates, the law firm representing Vantage Mezzanine Fund II Partnership in an extended commercial matter with Simba Properties Investment Co. Ltd, authorized the foreclosure sales.
Mezzanine financing, according to information on the Investopia site, is a “hybrid debt and equity financing that gives the lender the right to convert debt into equity in the business in the event of default…”
In the interview, Muwema said it was done maliciously to smear Butature’s good name. He said that although the arbitration process which was to take place in London has not yet started, they were stunned to read in the media that Vantage was set to seize his client’s properties.
On why the parties went to court in the first place, Muwema said the deal was unfair to Bitature as it charged unreasonable interest rates.
In the commercial division, Bitature had also objected to taking the case to arbitration arguing that this particular clause had been included in the loan agreement under duress, but the judge would have none of this. He ruled contemptuously: “In my view, a weak allegation of coercion and/or undue influence of nature such as this amounts to an insult to one’s own intelligence by defendants and their attorneys.”
However, Muwema said unfair deals are a common thing even for large entities like governments. He added that if the judge had looked into the matter further, he would have realized that there had indeed been undue influence.
We are still unable to speak to Robert Kirunda, Vantage’s attorney despite repeated calls to his known phone number.
Muwema added that after breaking the law, as law-abiding citizens, they would not continue to do business with Vantage.
On May 9, High Court Judge Musa Ssekaana ruled that the Vantage Mezzanine Fund II partnership had no legal basis to sue anyone in Uganda.
The entity had rushed to the High Court to seek judicial review of the Ugandan Registrar Services Bureau-URSB’s decision to deny the transfer of shares in four of Bitature’s companies which include; Simba Properties Investment Co. Limited, Simba Telecom Limited, Linda Properties Limited and Elgon Terrace Hotel Limited.
The share transfer came after Bitature failed to fulfill its part of the agreement to repay a loan it took out in 2014 to help with its property development. According to court documents from 2019, Vantage provided Bitature with $10 million and agreed to terms such that if he didn’t pay that money, it would be turned into stock for Vantage.
The agreement also stipulated that in the event of a disagreement, they would be resolved by arbitration and not by a court. This is why High Court Judge Boniface Wamala ruled that his court had no power to hear the dispute and referred it to arbitration.
“There are so many cases decided where the courts have canceled loan agreements with excessive interest rates… So that will be the second hurdle. If you skip the hurdle that you are legal and you exist, we now turn to the terms of the agreement.The commercial court examines the terms of the agreements between banks and borrowers every day.The commercial court is full of these cases on a daily basis.So the court has the power to examine the agreement that you signed with your bank and say if it was fair because there are certain obligations that a lender has to meet. There are certain rights that a consumer/borrower is entitled to. So they review and open those agreements and if they find them to be unfair, illegal, etc., they cancel them or they reduce the interest or the amount,” he said.