NAIROBI, Kenya, Nov 7 – The High Court has ordered Central Bank of Kenya (CBK) to stop the liquidation of Imperial Bank (IBL) which is under receivership.
The regulator has been prohibited from taking any steps which would result in the liquidation of the bank unless and until the relevant legal provisions are complied with.
Instead, Judge Joseph Odunga directed CBK and Kenya Deposit Insurance Corporation (KDCI) to engage Imaran Limited and five other firms who are shareholders of the bank together with the stakeholders to jointly find a workable framework to revive the bank.
The bank’s stakeholders include bondholders and depositors.
“The respondents are directed to find a workable legal framework for an outcome that is in the interest of the bank and all its shareholders,” ruled the judge
Noting that liquidation being a policy principle must be transparent and accountable, CBK was directed to ensure that relevant legal provisions are complied with in a recovery plan that is agreeable to all parties for the reopening of the bank.
In addition, CBK was ordered to provide the applicants with information concerning the arrangements entered into with Diamond Trust Bank, Kenya Commercial Bank (KCB) , NIC Bank and another and the manner in which the depositors are to be dealt with.
CBK is further required to furnish the applicants with information relating to the process of receivership as long as such information is not prejudicial to the ongoing investigations being undertaken.
It is contended that part of the investigations being undertaken revolves around fraudulent activities committed by or with the knowledge of the applicants.
The shareholders lodged the application in February this year after CBK triggered the transfer and exclusion process that includes selling of the bank’s assets and eventually liquidation.
The applicants accused CBK and KDIC entering into agreements with the said banks and commenced a transfer and exclusion process of IBL assets without complying with applicable legal requirements.
Shareholders also questioned why they were required to deposit with CBK Sh20 billion without providing any justification as to how the sum was arrived at and how it relates to the recovery plan.
They also faulted the respondents of acting unreasonably by failing to consider and engage them on their recovery plan which is aimed at facilitating the reopening of the bank.
So far , CBK has made payouts of Sh20bilion out of the Sh 82 billion that the bank held in deposits, doing away with nearly 90 percent of the bank’s depositor base.
Some of the bank’s large depositors include KTDA, the bank’s shareholders and other companies such as Ashok Doshi.
CBK had opposed the application accusing the firms of having conveniently omitted to disclose in their affidavits the constitution of the board of directors of Imperial Bank Limited.