The High Court has allowed Chase Bank which is under liquidation to pursue owners of French retail chain Carrefour over a debt of more than Sh10.5 million.
The lender, which was placed under liquidation by the Central Bank of Kenya in 2017, is seeking Sh10.5 million from Majid Al Futtaim Hypermarkets Ltd for costs incurred for setting up the retail chain’s outlet in addition to damages for loss of revenue.
The case was filed in August 2017 but following the new developments of being placed under receivership by the regulator, Chase Bank Limited (in Liquidation) moved back to court seeking to be allowed to proceed with the case to recover the debt.
“I have perused the pleadings filed herein and I note that the plaintiff’s claim is not frivolous or an abuse of the court process,” the judge said. Justice Okwany dismissed an application by Carrefour for Chase Bank to be compelled to provide security for costs, in case the quest by the lender is not successful.
The retail chain’s country finance manager Alaa Ahmed Mahmoud Abdo El-Gindy had argued that it would be difficult to pursue costs from the collapsed bank, in case it (Chase Bank) loses the case.
"At this interlocutory stage in the proceedings, the court cannot say that conclusive evidence has been presented to show that the plaintiff will be unable to pay costs, its current financial status notwithstanding. It is, therefore, my finding that an order of security of costs may jeopardise the plaintiff’s recovery plan," said the judge.
The regulator allowed the liquidation of the assets of Chase Bank, which was left out after the buyout by SBM Bank.
The Mauritian lender SBM Bank took over 75 percent of certain assets and liabilities from Chase Bank in 2018. During the Chase Bank deal, SBM valued the total assets acquired at Sh69.59 billion, with property, plant and equipment assigned a fair value of Sh1.25 billion.
The CBK had also directed the Kenya Deposit Insurance Corporation, the receiver, to start the liquidation of the remaining assets, in an exercise that is meant to salvage some money for customers who had more than the maximum guaranteed amount that now stands at Sh500,000.