In a significant legal ruling, Blue Wave Beverages Limited, along with its owners and investors Liu Quan and Lang Fang of Chinese origin, have lost their appeal in a case involving the default of a substantial loan amounting to USD 4,426,074 (about 16 billion UGX)
The case, which sheds light on the fraudulent activities and habitual loan defaults by the company’s owners, was decided on July 30, 2024, by the Uganda Court of Appeal.
The dispute centered around a loan agreement in which Blue Wave Beverages Limited had borrowed a principal amount of USD 3,500,000 from SFC Financial Limited and Lillian Kiiza who are local money lenders.
The repayment terms stipulated in the agreement required the loan to be repaid in 61 installments, commencing from February 28, 2021, with the final payment due by February 28, 2026.
However, due to a series of defaults by Blue Wave Beverages Limited, the outstanding debt had escalated to USD 4,426,074 by December 22, 2022.
In August 2023, following the defaults, a receiver was appointed to manage the loan recovery process. Despite partial payments totaling around USD 300,000, Blue Wave Beverages Limited’s continued inability to meet their repayment obligations led to legal actions.
The company’s directors, Liu Quan and Lang Fang, attributed the financial difficulties to the impact of the COVID-19 pandemic, which severely disrupted their business operations.
The initial ruling in December 2023, by Hon. Justice Stephen Mubiru, was in favor of the respondents, who were the creditors in this case.
The court ordered Blue Wave Beverages Limited to hand over possession of the charged properties, including plots and machinery located at Fourth Link Road, Luzira.
Unhappy with the decision, Blue Wave Beverages Limited appealed the ruling, citing various grounds including the right to arbitration as per the facility agreement and the alleged premature call of the loan.
However, the Court of Appeal upheld the previous ruling, stating that the appellants had failed to commence any arbitral proceedings as prescribed by the arbitration clause in their agreement.
The court also noted that Blue Wave Beverages Limited had not demonstrated sufficient grounds to warrant a stay of execution pending the appeal.
Consequently, the court ordered the execution of the foreclosure and sale of the mortgaged properties and assets to recover the outstanding debt.
Liu Quan and Lang Fang, the investors and owners behind Blue Wave Beverages Limited, have been implicated in numerous cases of loan defaults and fraudulent activities.
They still have impending court cases over the same.
Their continued pattern of failing to honor financial commitments has marred their reputation and brought legal scrutiny to their business operations.
The outcome of this case underscores the importance of adhering to loan repayment schedules and the legal implications of defaulting on significant financial obligations.
For Blue Wave Beverages Limited and its owners, Liu Quan and Lang Fang, this ruling marks a substantial setback as they grapple with the repercussions of their financial mismanagement and the ensuing legal challenges.
Court of Appeal ruled they pay costs to the Respondents.
