US court rules in favor of ATR KimEng

The Court of Chancery of the State of Delaware (USA) has ruled in favor of ATR KimEng Financial Corp. and its subsidiary ATR KimEng Capital Partners Inc. in a case versus Carlos R. Araneta, Hugo Bonilla, and Ma. Eliza G. Berrenguer.

In a report to the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE) dated Dec. 22, ATR KimEng director and executive vice president Renato L. Leveriza Jr. said that the Court of Chancery also ordered Araneta, Bonilla and Berrenguer to pay ATR KimEng the amount of $3.9 million "in damages plus pre-judgment as well as post-judgment interest on this amount."

Leveriza said that the decision of Vice Chancellor Leo Strine of the Court of Chancery of the State of Delaware "is totally in favor of plaintiffs (ATR KimEng)."

In its conclusion, the court said that "based on the foregoing, I find in favor of ATR on each of its claims and award ATR $3,922,000 in damages plus pre-judgment as well as post-judgment interest on this amount. Pre-judgment interest shall accrue at an annual rate of 25 percent with monthly compounding from the date of ATR’s investment in the Delaware Holding Company through the date a final judgment is entered. Post-judgment interest at the statutory rate will accrue thereafter until payment is made. Araneta shall also pay ATR’s attorneys’ fees, costs, and expenses incurred in prosecuting this action and shall pay any future costs expended by ATR in enforcing this judgment. Counsel for the parties shall craft a final order implementing this decision within 20 days."

The fixed amount ($3.9 million) represents the investment made by ATR KimEng in an advancement for a joint venture Delaware Holdings Co., formed between ATR and the Araneta group.

The Delaware case is related to Delaware Holdings Co., PMHI Holdings Corp. (f/k/a, LBC Global Corp.), LBC Operating Companies, The Professional Group Plans Inc., and ATR KimEng Capital Partners.

The court said that Araneta clearly manifests "an intent on his part to defraud and injure ATR KimEng by consumating a de facto liquidation of the Delaware Holding Co. in which its value was siphoned out entirely to the Araneta family, to the exclusion of ATR KimEng (which controlled 10 percent of the company)."

It further said that Araneta shown "a contempt for the judicial process by providing a false and incomplete response to a legitimate demand for books and records of the said companies sought by ATR KimEng as stakeholder; and a shamelessness about telling lies so extreme as to make it impossible to address all of the numerous false statements and assertions he made both from his own lips and through theories provided to his counsel."

In 2003, ATR KimEng sent a formal books and records demand letter to Araneta as a stockholder of the joint venture. It was later expanded to include the stock ledger, the records of all business transactions of the corporation and minutes of every meeting of the stockholders and directors.

When the Araneta group snubbed the demand letter, ATR filed an action with the Delaware court on October 2003. In June 2004, ATR filed a law suit.

In the same year, Araneta sued ATR KimEng in a Philippine regional trial court. However, the court still ruled in favor of ATR in January 2006. It was appealed by the Araneta group, and still the court ruled in favor of ATR.

The losing group again vowed to re-appeal the Philippine-filed case.