28th Aug 2015 09:59
LONDON (Alliance News) - Sefton Resources Inc shares fell on Friday after it said it will attend a hearing conducted by the US Bankruptcy Court in October where it will argue against a petition submitted by its former executive chairman that is trying to "force the company into bankruptcy proceedings".
Sefton is fighting the former chairman's claims, arguing he and his associates have a "lack of understanding" and made the claims in "bad faith".
Sefton shares were down 11% to 0.0401 pence per share on Friday morning.
The company's former executive chairman, Jim Ellerton, initiated legal proceedings against the company in May and in July filed documentation to the US Bankruptcy Court for the District of Colorado in an attempt to "force the company into bankruptcy proceedings".
Ellerton lodged the original legal claim against the company, two directors and one former director in May, claiming damages related to his resignation from the company's board, the termination of his consulting contract, and a deal with Hawker Energy.
That was followed by Ellerton filing an involuntary petition under Chapter 7 of the US bankruptcy code to try to force the company into bankruptcy.
Sefton has tried to fight the petition from the off, and filed a motion to dismiss the petition with the court and also filed claims to recover fees, costs and punitive damages against Ellerton because the involuntary petition was "invalid" and filed in "bad faith", it said.
On Friday, Sefton said the bankruptcy court held a meeting on Tuesday and has now informed the company it will conduct a hearing sometime during October giving Sefton's dismissal motion "top priority on its docket, setting a hearing on the first available dates for the court."
At that hearing, Ellerton will have to present his evidence and "prove that the petition was validly and properly brought". Sefton also will present its own evidence that it said will show Ellerton and his associates have a "lack of understanding and bad faith".
The court will then make a ruling over the case, including whether any fees, costs or damages are awarded in either direction.
"The board of Sefton believes the bankruptcy litigation to be fully without merit and will be actively pursuing all available remedies against Mr Ellerton and his affiliated entities," said the company in a statement.
In a separate case, Sefton is also seeking damages against Ellerton based on allegations of misconduct and unlawful activities during and after his time as an officer of the company.
By Joshua Warner; [email protected]; @JoshAlliance
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