Court issues temporary orders stopping liquidation of Dubai Bank

A court has temporarily stopped the Central Bank of Kenya (CBK) and Kenya Deposit Insurance Corporation (KDIC) from liquidating Dubai Bank Kenya (DBK).

Dubai bank Kenya limited is allegedly closed by central bank of Kenya today on 14/8/2015.PHOTO BY EDWARD KIPLIMO.

The court also stopped the two entities from closing down the bank, pending the hearing and determination of a suit filed by a banker.

Justice Eric Ogolla issued the conservatory orders on Friday and stopped CBK and KDIC from dismantling the ICT system of DBK after it was placed under receivership on August 14, this year. A depositor, Richardson and David Limited, had moved to court seeking orders to stop CBK and KDIC from liquidating the bank.

Justice Ogola certified the application as urgent. He granted the plaintiff leave to serve the defendants and any parties concerned through an advertisement in the Standard newspaper.

The judge set the inter parties hearing for October 8, and ordered that any party served with the order who then disobeyed it, would be guilty and liable for imprisonment for a period of six months.

KDIC, the receiver of the troubled bank, is tasked with ascertaining the bank’s liabilities and dividing its assets among depositors and creditors.

“On August 24, 2015, KDIC submitted a report to CBK recommending that Dubai Bank Kenya Limited be liquidated...the KDIC report indicates that considering the magnitude of weaknesses of Dubai Bank Kenya Limited, liquidation is the only feasible option,” CBK said in August.

On August 18, CBK had indicated that the liquidation process would ensure that all insured deposits would be paid by KDIC up to a maximum of Sh100,000 per depositor.

Any balances above Sh100,000 would be paid equitably as and when the liquidator accumulated enough funds from sale of assets of the collapsed bank and recoveries from outstanding loans and debts.

“KDIC will release information about the liquidation of Dubai Bank Limited and payment of depositors in due course,” CBK said.