Old Mutual has scored a win after the Court of Appeal stopped insolvency proceedings brought against the insurance firm by businessman Joel Kibe.
The appellate court further suspended an order issued by the High Court directing the insurance firm to deposit Sh500 million from the intended sale of Old Mutual Tower in Upper Hill, Nairobi in an escrow account.
The court noted that the company’s business is very sensitive and may be disrupted by any negative publicity and in case there were to be a run on the firm, the success of the intended appeal would not be cured by an award of damages.
“In our view, the grounds pointed above are not idle grounds but constitute arguable issues for the purposes of this kind of application,” said the court.
The court said once investors bolted from the company, they were likely to look elsewhere and would be reluctant to plough back their resources into an entity with negative publicity.
“We direct that pending the hearing and determination of the applicant’s intended appeal against the ruling of Mongare J, dated February 28, 2025...there be a stay of further proceedings therein,” said the court.
Mr Kibe sued the company seeking to compel it to buy his 1.544 million shares, together with interest of 18 percent.
The tycoon also filed the petition seeking protection for what he termed as “oppressive conduct” by the majority shareholders. He is seeking, among other remedies, liquidation of the company under Section 424 and 425 of the Insolvency Act.
The insurance firm opposed the case and challenged Mr Kibe’s authority to file the case. Old Mutual submitted that if the proceedings are not stopped and the petition proceeds, the possibility of the investors withdrawing their funds from the company in a hurry cannot discounted.
The company further said the continued hearing of the petition was likely to pose grave and far-reaching consequences on its survival in a highly regulated financial market, financial standing and reputation.
According to the company, the move was likely to trigger panic and unjustified alarm in the market among its investors. The business, it was contended, depends on its reputation and confidence of its customers in it and that the presentation of the petition is hostile to the survival and growth of the insurer.
The company said it had posted its financial performance reflecting that the net profit has grown by 835 percent from the loss of Sh114 million in 2023 to Sh838 million in 2024, hence the court should allow the firm to continue on the positive trajectory for the benefit of its investors.
The firm told the court that Mr Kibe was free to sell his shares in the same manner he bought them, but instead of seeking to sell his shares, he is only keen in winding up the company.
Mr Kibe, who says he invested a total of Sh245.6 million in Old Mutual’s predecessor, UAP Holdings ltd, opposed the case arguing that he and other minority shareholders were denied the opportunity to sell their shares.
He claimed thaat the directors of the company have sold or are in the process of selling all the company’s assets including Old Mutual Tower and its Tanzanian subsidiary.
The tycoon added that the company has not rendered accounts for the mass sales of the company’s assets and the proceeds, which he claimed were being diverted to foreign accounts.
The High Court had in February allowed the insurance firm to sell UAP Old Mutual Tower, in Upper Hill on condition that it deposits Sh500 million in an escrow account, in the event that tycoon Kibe, wins his battle with the firm.
The insurance firm had disclosed that it intended to sell the building for Sh5.5 billlion and use the proceeds to offset loans and other obligations.
