Appeal court halts Dubai bank liquidation
Dubai bank Directors Abdul Hafedh Zubeidi (left) and Prof Wilson Hassan Nandwa at Milimani Law Court on January 27, 2016 where they are accused of money laundering. The Central Bank of Kenya (CBK) seeks to overturn a ruling by justice Eric Ogola who suspended the bank's liquidation for 60 days. PHOTO | EVANS HABIL | NATION MEDIA GROUP
What you need to know:
- Judge Ogola had directed CBK to consider a proposal by a British Virgin Islands company to inject $21.5 million (Sh2.2 billion) into Dubai Bank to save the lender from liquidation.
- The Central Bank ordered the closure of Dubai Bank for failure to pay its debtors and for flouting regulatory rules.
The Court of Appeal has stopped the liquidation of Dubai bank pending a ruling at the High Court that had been in its favour against Central Bank.
The Central Bank of Kenya (CBK) seeks to overturn a ruling by justice Eric Ogola who suspended the liquidation for 60 days.
Judge Ogola had directed CBK to consider a proposal by a British Virgin Islands company to inject $21.5 million (Sh2.2 billion) into Dubai Bank to save the lender from liquidation.
In its application, Richardson & David wants to stop Dubai Bank's liquidation.
The firm says it has top depositors in its staple who are willing to convert their deposits into equity, a move it says could raise an additional Sh1 billion.
Judges Alnashir Visram, W. Karanja, and H. M Okwengu said that pending a ruling in this matter, which will be delivered on March 16, 2016, the liquidation of the bank is "hereby frozen."
The judges gave the order on the strength of a consent of the parties in the suit.
It was also ordered that the second respondent in the case, Kenya Deposit Insurance Corporation "is at liberty to pay Sh100,000 insured money to the depositor."
The Central Bank ordered the closure of Dubai Bank for failure to pay its debtors and for flouting regulatory rules.
The lender had on August 14 been put under receivership following “violations of banking laws and regulations, including failure to maintain adequate capital and liquidity ratios as well as provisions for non-performing loans and weak corporate governance structures”.
