The High Court has stopped the Central Bank of Kenya from transferring any assets or liabilities of Imperial Bank to NIC Bank after the collapsed lender’s owners challenged the move as part of plans to liquidate the bank.
Judge George Odunga yesterday issued temporary orders stopping CBK and the deposit protection fund from implementing a deal announced on Tuesday where NIC Bank was to take over a portion of Imperial Bank’s loan book and deposits, and restart payments to depositors.
“Pending hearing and determination … conservatory orders do issue barring the respondents (CBK and KDIC) from transferring, assigning, disposing of, dissipating or alienating any of the assets of Imperial Bank,” the judge ordered.
The NIC Bank deal is backed by the Kenya Deposit Insurance Corporation, who have been the receiver managers of Imperial Bank since October 13, 2015 when the troubled lender collapsed.
The matter will come up for hearing tomorrow.
The court also ordered CBK and KDIC not to implement the joint agreement announced on Tuesday, which effectively stops NIC Bank from making payments to depositors, taking over Imperial Bank branches and staff.
“This act by the respondents (CBK and KDIC) is an enhancement of the exclusion and transfer process commenced by them, which process ultimately culminates in the liquidation of the bank,” the directors say in an affidavit filed in court.
Imperial Bank owners told the court that transferring assets and liabilities to NIC Bank amounts to winding up the lender and would nullify an ongoing court case where the directors have sued to stop any actions that may lead to liquidation of their bank.
The shareholders in court include Imperial bank chairman Alnashir Popat, who controls a 14 per cent stake in the lender through Imaran Ltd, Hanif Mohamed Amirali Somji (10 per cent stake), and Jinit Shah (12.5 per cent).
Judge Odunga’s orders nip in the bud NIC Bank’s plans to conduct a due diligence and acquire the ‘good bank’ from the troubled lender.
Lift a freeze
NIC Bank was to resume disbursements to depositors capped at Sh1.5 million each, subject to the High Court lifting a freeze on payments.
A High Court ruling on the freezing of payments to Imperial Bank depositors is expected on July 4.
KDIC acting boss Mohamud Ahmed, Imperial Bank’s receiver manager, has responded to the filing by saying the lender’s directors were aware of the grand heists at the bank but did nothing to address the situation.
Source: Daily Nation