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Charif Souki, a pioneer of the US liquefied natural gas industry, has been ordered to repay $100mn to his lenders months after he was ousted from his latest venture.
Souki, who spearheaded the creation of the world’s largest LNG export industry and was once the country’s best-paid executive, has been engaged in a multiyear stand-off with lenders over a loan default that has already cost him his luxury Aspen ranch, his yacht and his shares in Tellurian, the floundering LNG developer he co-founded in 2016.
In an eleventh-hour bid to reverse the situation, Souki had sought to sue his lenders — funds managed by the Swiss bank UBS — arguing they had been “commercially unreasonable” in the manner in which they disposed of collateral, including the shares, which he said would have fetched considerably more if they were sold at an earlier point.
On Monday a Texas judge rejected the claim and said that Souki and his guarantors still owed “at least” $100mn to the secured parties.
“Based on the evidence and applicable law, the Secured Parties acted in good faith and were commercially reasonable . . . in every aspect of disposing the collateral. So Plaintiffs lose on all their claims,” wrote Christopher Lopez, US bankruptcy judge for Texas’s southern district, in his ruling.
“The Court also finds that the lenders are still owed at least $100 million in damages,” he added in his ruling on a case that began when several Souki-connected businesses filed for bankruptcy protection last year. A similar case taken by Souki in New York had previously failed.
UBS declined to comment. Souki’s representatives did not respond to a request for comment.
The decision is the latest blow to Souki’s finances that have coincided with a boom in exports of US LNG, an industry he pioneered through his former company Cheniere Energy. Cheniere made the first shipment of LNG from the contiguous US states in 2016 and has been crucial in propelling the country into becoming the world’s biggest exporter of the superchilled fuel.
But Souki has been unable to fully capitalise on the industry’s success. He was sacked from Cheniere before its first cargo set sail after a bitter clash with investor Carl Icahn.
He has failed to repeat the company’s feats at Tellurian, his latest venture, which has struggled to get its $25bn Driftwood project in Louisiana off the ground amid rising costs. Souki was ousted from the company in December.
Tellurian has warned of “substantial doubt” about its ability to continue as a going concern and has said it is exploring a sale. The company’s market capitalisation has collapsed from almost $3bn in 2017 — when shares traded for more than $20 — to about $448mn on Tuesday — with shares worth just over 50 cents.
Souki had argued UBS should have opted to sell his shares in Tellurian in early 2022 when they were trading above $4, and that “8 months of unreasonable delay passed before the Shares were sold”, according to court documents.
But the defendants said that they did not sell the stock until February 2023 because they were “working in good faith to reach a consensual solution with Souki” over the repayments.
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