Prime Finance Sues Fountain Publishers Over Shs43Bn Loan

Prime Finance Company has dragged Fountain Publishers Limited to court over failure to pay an outstanding loan worth Shs43b.

In two separate cases filed before the Commercial Division of the High Court, Prime Finance Company, accuses Fountain Publishers of breach of two loan agreements.

According to court documents, in one file Prime Finance Company is seeking recovery of $5.01m (over Shs18.5b), while in another it is seeking to recover $6.63m (over Shs24.5b).
Prime Finance Company is also seeking further contractual interest on the said sum, general damages, liability for fraud against Fountain Publishers and costs to the suit.

In both files, Fountain Publishers is sued alongside its two directors James Tumusiime and Loy Tumusiime.

Acting through Walusimbi and Co Advocates, Prime Finance Company contends that on July 2, 2014 Fountain Publishers borrowed $350,000 (over Shs1.29b), which had accrued interest of 1 per cent per week.  The company, on July 29, 2014, further borrowed $350,000 (over Shs1.29b) at a similar interest rate.

However, the loans have since accumulated due to unpaid interest  over a period of about five years.
The loans, court documents show were all due in 2014 but have since been defaulted.

Prime Finance Company claims they had agreed with Fountain Publishers to secure the loans with postdated cheques, which upon default had been banked but were dishonoured due to lack of funds in the accused’s accounts.

Court documents indicate that the two directors including James Tumusiime and Loy Tumusiime were informed of the dishonoured cheques but did not rectify the situation.
The company has since made two separate deposits of $10,000 on each loan, which are way below the outstanding sums.

Prime Finance Company faults Fountain Publishers and the two directors of entering into a contract for borrowing money, well aware that they did not have the financial ability and intention to repay.
Consequently, Prime Finance Company is seeking court to enter judgment against the accused for breach of contract and an order for payment of consolidated sums of Shs43.1b.

Prime Finance Company is also seeking court to declare that the accused committed acts of fraud in business relationship, an order that the corporate veil of the three accused is lifted so that each is held liable in their individual capacity, general damages, further contractual interest and costs of the suit, among other relief as court may deem it fit.

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Daily Monitor

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