IFS to continue its ANZ bond case legal fight

Last week, the People’s Supreme Court’s court of appeal ruled against Interfood Shareholding Company’s (IFS) claim for more than VND280 billion ($14.7 million) in compensation for a bond issue supposed to be offered by IFS via private placement with ANZ as the arranger of the proposed contract.

“Pursuant to Article 1.b of Resolutions 04/2003/NQ-HDTP of the Supreme People’s Court dated May 27, 2003, the advisory contract was still valid because upon emergence of the dispute, ANZ had the capacity to engage in the bond underwriting business.

Therefore, the court rejected IFS’ argument that the contract was void,” said the chairman of the court of appeal.

An IFS representative told VIR that the Ho Chi Minh Stock Exchange-listed firm did not agree with the court of appeal’s judgement. “After receiving the court’s judgment on paper, we will have to take the  next steps for this legal suit.”

The IFS representative said the court of appeal missed new details related to ANZ’s alledgely fraudulent behavior and regulations on securities trading and the stock market.

She said the bond issue advisory contract between ANZ and IFS was void for two reasons.

Firstly, IFS argued that to underwrite a bond issuance, ANZ must be licenced by the State Securities Commission (SSC), but the bank had not obtained such a licence which meant it did not have sufficient capacity for civil acts to carry out this business.

“The State Bank’s licence for ANZ was issued in June, 2008, while the advisory contract for underwriting bonds was signed in December, 2007. Therefore, this contract would have been void from the date of signing,” said the IFS representative.

Secondly, she claimed, ANZ was not faithful when providing the service offer to IFS without announcing that it did not have the required licence, the IFS representative said.

Besides, IFS said ANZ unilaterally brought the contract to an end and did not carry out its responsibility regulated in the contract to buy IFS issued bonds.

Meanwhile, ANZ’s representative said its bond issuance underwriting was based on the State Bank’s licence for ANZ  in 1992 which included the bond issuance underwriting.

ANZ also confirmed not to unilaterally stop the contract with IFS.

“The main reasons for IFS’ unsuccessful bond issuance were material adverse changes to IFS’ financial conditions or the financial market conditions. The advisory contract for underwriting bonds is a conditional contract and because the conditions for ANZ to perform its obligations were not satisfied, ANZ would not have to indemnify IFS.

“In fact, ANZ tried its best to carry out the advisory contract to give some advice to IFS to mobilise capital by other solutions such as to issue convertible bonds or to find financing banks,” said the ANZ representative.

In October  2009, IFS commenced legal proceedings against ANZ, requesting the People’s Court of Hanoi declare the advisory contract void and to uphold a claim for damages for losses incurred by IFS as a result of abortion of the bond deal.

In the first instance court, the Hanoi People’s Court proclaimed that the contract signed between ANZ and IFS was valid and rejected IFS’ claims.