Court stops Imperial Bank liquidation after tycoon sues to recover billions
Imperial Bank's branch in Likoni, Mombasa County in this picture taken on October 14, 2015.
The High Court in Mombasa has temporarily stopped the liquidation of Imperial Bank Ltd (IBL) as ordered by Central Bank of Kenya (CBK) earlier this month.
Justice John Onyiengo issued an order suspending CBK's decision to appoint Kenya Deposit Insurance Corporation (KDIC) as liquidator of the lender that is in receivership.
The court further issued an order restraining the financial sector regulator and the bank, either through KDIC or any other persons acting for them, from paying out deposits in execution of the CBK decision.
The orders were issued following an application by Mombasa-based billionaire Ashok Doshi and his wife Amit.
The two have sued Imperial Bank and CBK seeking over Sh1 billion deposits they held at the lender before its collapse.
Through lawyer Willis Oluga, the couple argues that on July 15, 2016, a consent was recorded under which IBL gave an undertaking to pay any money adjudged due and payable to them after determination of the case.
"The consent is still binding to date and has never been reviewed, varied or set aside," argued Mr Oluga.
The lawyer further told the court that even though the consent is still binding, CBK appointed KDIC as liquidator of IBL on December 8.
"The appointment of KDIC as the liquidator has the effect of defeating the consent recorded in this suit since the legal status of IBL has changed from being in receivership to being in liquidation...and the consent is no longer binding to IBL," part of the application states.
According to the tycoon, KDIC is likely to start paying out depositors thus the payments will defeat their claim for billions locked inside the lender, since there will be no money to pay them out should they succeed.
Mr Doshi and his wife also want an order issued directing the defendants to deposit $7.2 million in a joint account in the names of lawyers on record within 30 days of the order as security for any decree that may be passed by court.
Alternatively, they want the defendants to be ordered to jointly and severally give a binding undertaking to pay any money adjudged due and payable to them.
In their main suit, the couple sought an injunction restraining CBK and Imperial Bank from continuing with any dealings with their money in any manner, either by investing, transferring to other banks or KIDC.
They also want an order directing the defendants to file Imperial Bank’s statement of accounts showing liquidity in the deposit account, audit statement published and approved for 2014/2015 and any other liquid and tangible securities held by the CBK as of October 13 2015.
The couple held both dollar and shilling accounts with IBL.
The application has been fixed for hearing on January 10.
