The Commissioner of Insurance Godfrey Kiptum has been allowed to challenge plans to revive collapsed underwriter Lakestar Insurance Company Limited.
High Court Judge Alfred Mabeya allowed Mr Kiptum to challenge proceedings filed by an administrator of the estate of John Kipkembo Kilel and respond to an earlier application filed by the deceased in 2014.
According to Mr Kiptum, the orders issued in 2003- winding up the insurer- may be suspended, a move that would result in reopening a company that was wound up over 20 years ago for failing to meet its obligations.
The judge noted that the industry regulator failed to participate in the proceedings in 2014 because of the mistakes of its then-advocates.
“Further, the nature of the orders sought in the motion of 10/10/2014 has far-reaching implications, not only for the applicant but also for the broader public interest, given that the company in question was wound up following regulatory concerns,” said the judge.
The court was told that the collapsed insurer had previously sought to be paid Sh12 billion for winding up the company but the case was dismissed in 2021.
Mr Kiptum maintained that the company ceased to exist as it was liquidated. Further, Mr Kilel, who was the majority shareholder, passed away in 2016, making it impossible for him to have instructed counsel to apply.
He submitted that reviving a collapsed insurance company would negatively impact policyholders and public confidence in the insurance sector.
Lakestar Insurance opposed the case arguing that it was filing the application more than 20 years after the company was wound up.
In the initial case, Mr Kilel had accused then-IRA chief executive Sammy Makove of engineering false information in order to liquidate the company in 2003.
He had sought to be paid Sh2 billion for business opportunities lost, Sh3.7 billion for loss of property, capital gains, and cash loss as well as Sh6.2 billion for reputation damage. He wants a further Sh39.6 million for loss of monthly earnings and Sh6.2 million for loss of earnings from investment.
Mr Kiptum on his part blamed Mr Kilel saying he was responsible for the collapse of the insurer as he misused and siphoned funds from the company.
He told the court previously that Mr Kilel together with other directors, shamelessly fleeced, embezzled assets and defrauded the Company in excess of Sh176 million over four years, leading to its collapse.
