Owners of collapsed insurance company Blue Shield have three months to inject Sh600 million capital into the business or risk closure.
Blue Shield was put under statutory management by the Insurance Regulatory Authority (IRA) after falling into financial difficulties.
While extending the moratorium period granted to the statutory manager, High Court judge Charles Kariuki warned the insurer risks winding up “unless it fulfils the revival terms and conditions agreed upon”.
“I find merit in the application by lawyer Ben Millimo that unless the period of the statutory manager is extended all the gains realised so far will go to waste,” said Mr Justice Kariuki while extending the moratorium period for three months from January 21.
Mr Millimo, representing the IRA, told the judge that Blue Shield was placed under statutory management on September 16, 2011, after it failed to meet Sh2.2 billion claims to insurers.
The lawyer said the statutory manager is expected to pursue shareholders who have agreed to deposit Sh400 million into an escrow account and also pump in another Sh200 million as working capital.
“The statutory manager is also expected to raise a further Sh864 million by selling part of Blue Shield Towers in Upper Hill, Nairobi, with a view to up-scaling the liquidity levels of the company,” said Mr Millimo.
“If the shareholders fail to meet the revival conditions within three months I will be left with no option but to commence winding up proceedings against the company,” declared commissioner of insurance Sammy Makove.
Blue Shield is being managed by the Policy Holders Compensation Fund.
Mr Millimo urged the statutory manager be granted three more months to raise the money required to revive the insurer.
The judge was further told that Mr Makove has asked the shareholders to transfer the money to the Blue Shield bank account. The last extension granted was in July 22, 2015 to January 21, a period of six months.
Shareholders failed to meet the targets set in the revival proposals.
“For avoidance of doubt among the discussed and agreed primary preconditions for the company revival as at January 15, 2015 were that the shareholders inject Sh400 million to be held in an escrow account and a further Sh200 million working capital,” says Mr Makove.
Justice Kariuki allowed the request and extended the managers term.