The High Court has extended the receivership of Imperial Bank Ltd by 90 days. The receivership was to expire on April 14 following an extension by Central Bank of Kenya.
Shareholders, fearing the bank would inevitably go into liquidation once the statutory management comes to an end, had moved to court seeking to have CBK and Kenya Deposit Insurance Corporation (KDIC) chief cited for contempt of court for disobeying court orders on how to proceed with the process of reviving the bank.
Through lawyer Andrew Wandabwa, the shareholders protested that both CBK and the Kenya Depositors Insurance Corporation (KDIC) had not engaged them in dialogue on reviving the troubled bank in disregard of court orders to that effect. The three month court extension took effect Friday.
Wandabwa said the extension was necessary to allow for more dialogue on how to revive the bank.
The court had on November 4, 2016 ordered both CBK and KDIC to formally engage the Imperial Bank shareholders and other stakeholders including bondholders and depositors to jointly, and to the extent permissible by law, finding a workable legal framework for an outcome that is in the interests of the bank and all its stakeholders.
It also barred them from taking steps that would cumulatively or otherwise result in the liquidation of the bank unless and until the legal provisions are complied with.
KDIC lawyer Phillip Murgor said the receiver will use this 90 days to engage the depositors about their payment.
The shareholders have sued the receiver for failing to pay them their remaining deposits, accusing it of disregarding various requests made to it. They want the receiver forced to pay.
Following the court ruling, CBK issued a statement confirming the 90-day extension. It said it consented to the move following an agreement it struck with KDIC and the shareholders.
“Today the High Court granted a 90-day extension of the Receivership over Imperial Bank Limited (In Receivership) (IBL). This was following agreement between the shareholders, Kenya Deposit Insurance Corporation (KDIC) and Central Bank of Kenya (CBK), that it was necessary for the KDIC to be accorded more time to resolve the receivership. CBK consented to this extension on the basis that it is necessary for KDIC to continue as Receiver of IBL,” the statement by the apex lender read.
Meanwhile, Justice Odunga will on May 17 hear an application by lawyers representing CBK and KDIC seeking to have their clients excluded from the contempt of court proceedings filed by the shareholders.
The shareholders filed the contempt claim against CBK, Governor Patrick Njoroge and the Board of Directors led by Mohammed Nyaoga as well as KDIC, its management and board of directors for failing to adhere to a judicial review ruling issued by the Judge on November 4, 2016.
The application was filed by Murgor for KDIC and Amolo and Gacoka Advocates for CBK raising a preliminary objection to the inclusion of their clients in the contempt proceedings.
Amolo and Gacoka Advocates avers the shareholders did not give an undertaking on punishment of a state organ, government department or corporation guilty of contempt of court as provided for by Section 30 of the Contempt of Court Act.
In addition, the law firm alleges its clients were deemed guilty of contempt of court and condemned unheard contrary to section 50(1) of the Constitution, which provides that they be deemed innocent until the contrary is established.
In an affidavit, KDIC acting chief executive Mohamud Ahmed raises similar grounds and further protests that an application that requires him to personally appear in court violates his right to choose and be represented by an advocate and to be informed of this right promptly.
Murgor had sought to have the application certified as urgent.
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