The High Court has rejected an application seeking to hold an Ecobank Kenya manager liable for releasing funds belonging to a plane leasing firm facing insolvency.
The court declined to hold the branch manager at Ecobank Towers liable, saying there was evidence to show that the funds belonging to DAC Aviation (EA) Limited were released to a third party, pursuant to a court order.
The Kenyan aircraft leasing company based at Wilson Airport was placed under receivership over a debt of Sh1.3 billion owed to an Irish aviation firm, Amra Leasing Ltd.
The receiver manager, PVRA Rao, submitted that the bank violated the Insolvency Act by releasing funds after the commencement of the liquidation. Mr Rao wanted the court to declare the release of the company’s funds was unlawful, and the manager should be personally liable for any loss occasioned.
The court noted that upon liquidation, the company’s assets vest in the liquidator, and that executions commenced thereafter are, as a general rule, prohibited under Section 430 of the Insolvency Act.
Restraining orders
However, the court said the statutory protection must be balanced against the settled principle that court orders are binding and must be obeyed unless and until set aside.
According to the court, there was evidence demonstrating that the bank released the funds pursuant to court order and there were no restraining orders.
“There is no evidence of bad faith, collusion, or unilateral dissipation of funds by the Respondent. The court is persuaded that although the effect of compliance may have been detrimental to the liquidation estate, the Respondent’s actions do not amount to unlawful interference with the Liquidator’s mandate to justify restitutionary or punitive orders,” said the court.
The court said to hold otherwise would expose third parties to liability for obeying subsisting orders, an “outcome inimical to legal certainty”.
The court equally dismissed an application by Emmanuel Anassis, a former director of DAC Aviation, seeking orders to access the firm’s entire business and financial records in possession of the receiver manager.
Mr Anassis submitted that as a former director, beneficial owner, and personal guarantor, he has a legitimate interest in the affairs of the company and in the manner in which the receivership and liquidation were conducted.
Mr Rao opposed the application saying Mr Anassis has no locus standi, contending that he was not a party to the insolvency proceedings and had not sought or obtained leave to join the case.
The receiver manager added that the order he was seeking has since been overtaken since the property was transferred to a third party on February 24, 2025.
The court said in the ruling that any allegations of misconduct must be pursued through appropriate proceedings grounded in evidence and proper standing.
“The Court accordingly finds that the substantive reliefs sought in the application dated 5th May 2025 are both unsupported by standing and incapable of enforcement,” said the court.
Amra Leasing sued DAC Aviation before a UK court and obtained a judgment in 2020. The Irish firm moved to Kenya and the judgment was recognized by the High Court.
