Ecgc specific approval list

Querist : Anonymous (Querist) 22 December 2011 This query is : Resolved
Atlas (A Public Ltd. Co.) had export packing facilities/bill discounting limits from a Consortium of Banks X & Y. The lead Bank X had the facilities secured by guarantees of Atlas’s director Mr. Zak and Atlas’s sister company Beta (A Pvt. Ltd Co.). Bank Y had its facilities secured by a guarantee of Alas’s director Mr. Zak.

Atlas suffered losses and became an NPA. Bank Y filed a claim against Atlas with ECGC and received a payment of its claim of approx Rs.150 Lakhs. Subsequently Atlas reached a settlement with bank Y at approx Rs. 50 Thousand and received a no due certificate for itself and its Director Zak in the year 2004.

Similarly Bank X also filed a claim with ECGC but due to deficiency in its paperwork received no payment from them. Subsequently Atlas also reached a settlement with X and received no due certificate for itself and its guarantors Beta and Zak in the year 2006.

Atlas has subsequently undergone a change of management and promoters and is now not related to Beta and has no common directors.
Company Beta now has been granted export credit facilities from Bank M and needs cover from ECGC to avail the facility. Beta has now learnt that ECGC is unable to provide cover to Beta on the grounds that it is on the specific approval list of ECGC (as a sister concern of Atlas though it is no longer related ) and that it has a common director Zak (though Zak resigned from the board of directors of Atlas in 2008)

Beta has approached ECGC for deletion of its name from the SAL and both the banks X and Y have given their no objection to ECGC for such deletion.

Under the circumstances:
1.Are Beta and Zak entitled to be removed from the SAL?

2.Can ECGC continue to keep Beta and Zak on the SAL and deny cover to Beta for exports in view of the claim it had to pay on behalf of A which it will have to write off?

3.What remedies are available to Beta and Zak if it is denied cover by ECGC?

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Raj Kumar Makkad (Expert) 23 December 2011
It shall be better for you to post your query at www.caclubindia.com

Shailesh Kumar Shah (Expert) 23 December 2011
Rightly Guided.

prabhakar singh (Expert) 23 December 2011
yes!Rightly Guided.

Rakesh Jain (Expert) 16 March 2014
I hope that the matter would have been resolved by now and with the removal of directors' names from ECGC Specific Approval List. If not and you want any further guidance in the matter, I may be contacted on 8130009681 or jainrk1953@gmail.com

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