The High Court has temporarily barred the Insurance Regulatory Authority (IRA) from liquidating Blue Shield Insurance to allow the collapsed firm’s owners to challenge a ruling that opened the door for its winding up.
Justice Francis Tuiyott Wednesday issued the orders after Blue Shield’s owners told him the acting Commissioner for Insurance Godfrey Kiptum could gazette the firm’s liquidation at any time despite their intention to fight against the move at the Court of Appeal.
Blue Shield was placed under statutory management on September 16, 2011 after several years of complaints by clients whose claims had been delayed.
The firm was the biggest insurer of PSVs — matatus and motorcycles — by the time it was taken over by the regulator.
The judge had through an October 5 ruling allowed Mr Kiptum to start the liquidation. The ruling was on an application by Mr Kiptum, seeking permission to start Blue Shield’s liquidation.
But Blue Shield’s owners Beth Muigai and Jean Ngengi have in their appeal faulted Justice Tuiyott for allowing the acting Commissioner of Insurance to continue with the liquidation despite alleged involvement of the IRA boss’ predecessor in the impairment of Sh767 million from the collapsed firm.
The collapsed insurance owners claim that former Commissioner of Insurance Sammy Makove and receiver manager John Keah led a pilfering scheme at the collapsed insurer that left revenue of Sh767 million unaccounted for.
“The learned judge ignored the total impairment of Sh767 million attributed to the Commissioner of Insurance and statutory managers appointed by him during the statutory management period, that is Sh512 million unearthed by the Auditor General and Sh255 million flagged by Parker Randall (auditors),” the collapsed insurer’s owners say in suit papers.
Apollo Mboya, representing Ms Muigai and Ms Ngengi, further argues that the Insolvency Act does not have winding up rules, and that Justice Tuiyott was wrong to allow the acting IRA boss to proceed with Blue Shield’s liquidation in the absence of the directions on liquidation of corporate bodies.
Mr Mboya adds that Justice Tuiyott ignored the fact that Blue Shield is still capable of a turnaround.
Mr Kiptum is yet to respond to the appeal.