MeDirect rejects bond disclosure allegations, warns Vaswani of damages claim

MeDirect Bank has rejected allegations that it misled prospective bond investors by leaving significant litigation out of its prospectus, warning Maltese businessman Andrew Vaswani that it could seek damages for what it describes as unlawful interference with its €30 million bond issue.

In a counter-protest filed in court, the bank argued that the dispute stems from substantial unpaid debts owed by Vaswani and companies connected to him. It maintains that it used court procedures to recover money owed and disputes his assessment of the financial risks arising from the litigation.

The row centres on the information MeDirect provided to investors when offering its 5.85% unsecured subordinated bonds. A bond is a loan from investors to the bank in exchange for interest. These bonds are not backed by specific collateral and rank behind more senior creditors if the bank is wound up.

The prospectus is the document intended to help investors understand the bank’s finances, the terms of the investment and its risks.

In his original protest, Vaswani challenged the prospectus statement that no proceedings during the preceding twelve months might have, or had had, significant effects on the bank’s financial position or profitability.

He identified disputes concerning Daniels Shopping Complex in Ħamrun, enforcement proceedings involving Alison Investments Limited, and proceedings described as criminal in nature.

The underlying dispute includes a challenge to a deed acknowledging approximately €13.94 million in debt, a claim for damages and challenges to the legal basis for enforcement and a judicial sale.

MeDirect maintained that it had legally enforceable grounds to recover the debts. It also disputed Vaswani’s account of the property sale, stressing that it took place through a judicial auction under court authority.

On disclosure, MeDirect said it assessed the proceedings and concluded that they did not present material risks requiring inclusion in the prospectus.

The bank rejected Vaswani’s demands for internal assessments and regulatory correspondence, as well as his seven-day deadline for action.

Accusing him of presenting facts selectively and applying improper pressure, MeDirect reserved its right to seek compensation for financial losses, additional funding costs and reputational damage attributable to unlawful interference.