Goldquest-controlled Ferntea sued for payments

Ferntea, the Colombo-based tea firm whose founder was ousted by a group backed by the controversial GoldQuest group, is now facing an insolvency suit and a winding up application.

Carmel Consolidated (Pvt) Ltd, a company controlled by the family of Jayantha Fernando, Chairman/Managing Director and founder of the company who was ‘dismissed’ by the new directorate, has filed the petition saying Ferntea is unable to pay its debts and is in a grave financial crisis. Carmel says Ferntea owes it Rs 55.5 million rupees.

Ferntea’s new Chairman/Managing Director Anura Fernando (no relation of Jayantha), rejected the claim in a letter to the Colombo Stock Exchange saying the “winding up application is frivolous and cannot be substainable.”

The petition was filed in the Colombo District Court on September 8 and will be taken up again on September 22. Carmel says it granted a loan of Rs 55.5 million to Ferntea in November 2005 and the latter was required to return the money in three installments of Rs 18.5 million each. The company failed to provide a bank guarantee as required, to Carmel in respect of the loan, and also failed to pay the required first installment.

Carmel then filed action for insolvency demanding the full amount, saying Ferntea is unable to pay its debts. Another case filed by Jayantha Fernando against Ferntea is due to be taken up on September 26. Goldquest-related parties have also bought into the NDB Bank, with an eye on its links with Sri Lanka’s biggest bank, Bank of Ceylon, but NDB has so far refused to register these transactions.