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By Ben Turney | Monday 8 September 2014
Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
On Friday, I revealed the Texas Community Bank’s legal action against New World Oil & Gas (NEW) CEO Bill Kelleher for his apparent default on a $550,000 debt. This was immediately before New World listed on AIM. Mr Kelleher had secured his unpaid loan on his private yacht, Neftegaz. In the original action the Texas Community Bank sought to take possession of Neftegaz, but by January 14th 2014 it seems that Mr Kelleher still owed $298,846.25 of the original debt. On this date the US District Court Southern District of Texas granted an Order for Turnover Relief against Mr Kelleher. It ordered him to “turn over for levy to the Harris County Constable… within ten days… all shares of stock in New World Oil and Gas, PLC, except those that he is restricted from transferring or selling under the terms of the agreement with his employer, cash and securities in bank and safety deposit accounts totalling $298,846.25”. Funnily enough, I can’t find any reference to this court order in an RNS.
Learning American legal jargon is not my idea of fun. Unfortunately, in this job it seems a vital necessity. A cursory search on the Internet revealed that an “Order For Turnover Relief” is a Texan mechanism of near last resort for a creditor chasing a dogged defaulter. Described neatly in this link, turnover relief is;
“a procedure in which the court orders your judgment debtor to turn over to you, the judgment creditor, all non-exempt assets to satisfy the judgment you hold. What the procedure essentially does is place the burden on your judgment debtor to produce the property to you rather than the burden being on you to locate the property through the normal post-judgment discovery process.“
I’ve highlighted the words “non-exempt assets”.
Whether or not Mr Kelleher tried to claim that his New World stock was an exempt asset, thereby keeping it from out of the reach of his pursuing creditor, is unclear. However, the court found that the “Defendant (Mr Kelleher, for the avoidance of doubt), is the owner of non-exempt property including but not limited to shares of stock in New World Oil and Gas, PLC” and “that said property is not exempt from attachment, execution, or seizure but that it cannot be attached or levied on by ordinary legal process”.
In other words, try as it might, Austin Settlement (acting as Assignee to the Texas Community Bank), just could not get its hands on the outstanding $298,846.25 it was due. Therefore the court made its order that Mr Kelleher turn over his New World stock (that which wasn’t restricted under the terms of his employment), cash and securities in the bank to the value of that sum. What he did to satisfy this order is not detailed in the document linked above.
Several obvious questions arise from this affair;
Remember that in the background to this is the $282,091 Mr Kelleher owed New World at the end of last year, on his controversial loan, which enabled him to participate in March 2013’s controversial placement.
On Friday I tried to contact Beaumont Cornish. You will be shocked to hear no one has returned my calls or emails. This evening I have emailed New World’s PR representative to confirm that the information on the company’s AIM Rule 26 Declaration is correct.
More on this story to follow.
Tom and I have just published a new e-book, “The 49 Golden Rules of Making Money from oil, gas and mining shares” and it is now available on Amazon for £6.25 or you can order a FREE copy HERE
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