The High Court yesterday gave the Central Bank the nod to continue recovering assets and liabilities of the collapsed Imperial Bank in receivership, pending determination of a case filed in court.
Justice George Odunga said CBK’s agency Kenya Deposit Insurance Corporation and NIC Bank are at liberty to review and identify the quality of assets of the collapsed bank as agreed on June 21.
However, Justice Odunga barred the two institutions from disposing off other assets of IBL until the dispute is resolved. The order only exempts assets realized from loan repayment that may be required for the purposes of paying depositors.
The judge declined a request by Imperial Bank Ltd’s shareholders to halt the agreement between KDIC and NIC.
“I have perused the agreement entered into between KDIC and NIC Bank and there seems to be no mention of the intention by NIC to acquire the assets and liabilities of the IBL” the judge said.
He was of the opinion that the assets of the IBL cannot be disposed off for NIC to undertake its obligations under the said agreement.
Justice Odunga further observed the agreement expressly provides for indemnities by KDIC while protecting NIC against any claims by creditors or shareholders of IBL or third parties.
Further, the position adopted by NIC, according to the judge, is that the money to be paid out to depositors does not constitute any assets of IBL but is to be drawn from the Deposit Insurance Fund.
NIC had told the court that concerns by IBL shareholders that the bank’s assets will be sold as the result of its appointment by CBK were misplaced since no assets or liabilities can be disposed off until it has conducted a proper due diligence and determined the viability of IBL.
NIC further said it does not anticipate that it will be able to establish due diligence before the expiry of the first term of the agreement which is not until October 13.
The High Court had last week stopped the CBK from transferring any assets to NIC Bank after the collapsed lender’s owners challenged the move.