Court temporarily stops liquidation of Dubai Bank
The Court of Appeal has temporarily stopped the liquidation of Dubai Bank until a case challenging an earlier ruling by the High Court ordering for the liquidation of the bank is heard and determined.
The Central Bank of Kenya (CBK) is seeking a review of the ruling by Justice Eric Ogola that adjourned the liquidation process for 60 days.
The Central Bank announced that it was placing Dubai Bank under receivership on grounds that it had failed or demonstrated inability to pay its debtors and for breaching regulatory rules.
The lender had on August 14th last year been put under receivership following “violations of banking laws and regulations, including failure to maintain adequate capital and liquidity ratios as well as provisions for non-performing loans and weak corporate governance structures”.
Justice Ogola advised CBK to consider a proposal by a British Virgin Islands company to invest an estimate of 2.2 billion shillings into Dubai Bank to save the financier from liquidation.
Judges Alnashir Visram, Wanjiru Karanja and Hannah Okwengu said that the liquidation of the bank will remain frozen until the ruling of the matter which will be delivered on the 16th of March this year.
Following stark orders, the second respondent in the case, Kenya Deposit Insurance Corporation (KDIC), was authorized to pay a sum of 100,000 shillings insured money to the creditors.
KDIC also argued that the orders from Justice Ogola were unwarranted as they left depositors and creditors of the bank exposed to risks of losing their cash.
By Shamsa Abdulkadir