The High Court has temporarily stopped the liquidation of collapsed Imperial Bank after billionaire businessman Ashok Doshi and his wife Amit sued over their Sh1 billion deposit.
Justice John Onyiengo, sitting in Mombasa, issued the order suspending the Central Bank of Kenya’s (CBK) order to the Kenya Deposit Insurance Corporation (KDIC) to wind up the lender, setting the stage for the sale of the lender’s remaining assets.
The court also barred any payments to depositors in the execution of the CBK's directive.
The Mombasa-based tycoon and his wife sued Imperial Bank and CBK in a bid to recover their deposit in the collapsed lender.
Through lawyer Willis Oluga, the Doshis argue that on July 15, 2016, three months after the bank was placed under receivership, the lender consented to pay them their dues after they sued it.
"The consent is still binding to date and has never been reviewed, varied or set aside," said Mr Oluga.
"The appointment of KDIC as the liquidator has the effect of defeating the consent recorded in this suit since the legal status of Imperial Bank has changed from being in receivership to being in liquidation and the consent is no longer binding to Imperial Bank."
Imperial Bank collapsed six years ago with money belonging to depositors, bondholders and creditors. Most of the money it has was used to pay depositors, including the sale of Sh3.2 billion assets and liabilities to KCB Bank #ticker:KCB last year.
When appointing KDIC to liquidate the bank and process payments, CBK said only 4,300 depositors, representing eight percent, are yet to get back their money in full.
In their petition. the Doshis also want the banking regulator and KDIC ordered to deposit $7.2 million (Sh814 million) in a joint account in the names of lawyers on record as security for any decree that may be passed by the court. Alternatively, they want the defendants to be directed to jointly and severally give a binding undertaking to pay back their deposits.
They also want the CBK to release Imperial Bank’s statement of accounts showing liquidity in the deposit account, audit statement published and approved for 2014/2015 and any other liquid and tangible securities held by the CBK as of October 13, 2015.
They claim the lender had enough money to pay all depositors at the time it was put under receivership on April 7, 2016.
The case will be heard on January 10.