UPDATE: 1MDB lawyer on legal issues with sale of Equanimity

Ian Molyneaux
By Ian Molyneaux October 16, 2018 16:38

UPDATE: 1MDB lawyer on legal issues with sale of Equanimity

It is not every day that superyachts are sold in execution, but that of the confiscated yacht  Equanimity set to be completed in Malaysia in November or December is expected to be completed smoothly through a sealed-bid auction. The only possible delay, and it is a minor one would be if all bids failed to meet the yacht’s so-far undisclosed appraised value. Under that circumstance the entire sale would need a new approval from the Malaysian court.

The appraised value by Winterbotham itself remains sealed and will only be opened immediately before those of the sealed bids. Sitpah Selvaratnam, who heads the legal team representing 1Malaysia Development Berhad (1MDB) and the Malaysian government on whose behalf the Equanimity is to be sold said in an interview that if offers were below the asset’s valuation then: “We would have to go back to the court for approval and the court would weigh up the reasons for why we should complete the sale below the market value.”

The lawyer also confirmed that bidders will face qualification criteria to gain ownership:

“There will be some vetting and some criteria qualifications for the bidders and that will be formalised towards the end of this month.

“This will come out as part of the information package that Burgess (the selling agent) will be advancing for us.”

Marine surveyors Winterbotham have been assigned to carry out the appraisal with their valuation remaining undisclosed to any party but the court.

“The appraisement amount will be totally confidential and, to maintain the integrity of the process, they will give their evaluation to the Malaysian court,” said Ms Selvaratnam. “That will be in a sealed envelope and that valuation would only be opened once all the bids are received.

“The sealed envelope with Winterbotham’s appraisal value will be opened and if there is a bid or offer that exceeds the appraised value then it’s likely to be acceptable with the highest one winning and allowing the sale to go through.”

1MDB and Ms Selvaratnam reassure any prospective bidders that the auction sale is legally watertight: “This is what we call a judicial sale, it’s done under the ruling of the courts in Malaysia and the Malaysian court’s Admiralty jurisdiction – the jurisdiction that governs ships.

“It’s identical to the process in England, so we borrow English law in terms of Admiralty Law and it should therefore be fairly familiar to those in legal circles in England and other Commonwealth jurisdictions.”

“When it’s termed a judicial sale, the yacht is sold clean.

“The various ship registries would recognise the judicial sale, the order for sale and would make the necessary deletions at the registry itself.

“No other claims would be able to trace into that ship — they would be able to trace into the proceeds that are in court, but they cannot trace into the ship any further.

“The ship will be clean of all claims that may have existed before. Once she (Equanimity) is sold by the sheriff of the court then the purchaser gets a clean title.”

Reuters reported that six different countries are looking into the activities of Malaysian financer Jho Low who is accused of diverting funds from 1MDB to purchase items such as Equanimity.

“All the various suits in all the various countries are in relation to the 1MDB group, said Ms. Selvaratnam.

“We have been in court for two months and there have been no other competing claims to these monies.

“It’s been more than a month since the order for sale has been given, no challenge has come in.  So at this stage we do not even anticipate a contest to the monies.

“Of course, there are many suits all over the world in regard to the 1MDB but they are based on other properties, art work etc. But to the vessel — No.

“We have not seen any party contest the admiralty action because it’s really sound.”

Equanimity was originally purchased for $260 million.

 

Click for previous Equanimity article

Ian Molyneaux
By Ian Molyneaux October 16, 2018 16:38

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