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Dubai Bank owners given more days to agree outside court

By Lee Mwiti | March 18th 2016

Dubai Bank of Kenya Limited (DBKL) customers will have to wait for a further 60 days to know the fate of their deposits.

This comes after a ruling by the High Court yesterday which directs the bank’s shareholders to first exhaust all avenues to revive it, before Central Bank Kenya (CBK) can be allowed to carry on with the liquidation.

“During that said period of 60 days, the respondents shall take steps and shall fully consider the proposal by Ms Sovereign Holding Ltd to inject Sh2,214,500,000 into the bank together with any other proposals by depositors or other interested parties in the suit and report to court about the viability of these proposals in an effort to revive the bank,” the ruling read by appellate Judges Alnashir Visram, W. Karanja and H.M Okwengu said.

CBK is pushing to overturn a ruling by Justice Eric Ogola who had earlier issued orders suspending liquidation for 60 days.

The bank's chairman Hassan Zubeidi has now written to the Central Bank asking for a meeting with the governor to explain a raft of proposals on how to revive Dubai Bank.

Mr Zubeidi and other Dubai Bank shareholders had moved to court opposing an application by CBK to continue with the liquidation.

The Central Bank had already appointed the Kenya Deposit Insurance Corporation (KDCI) as the official receivers who presented a report saying Dubai Bank’s problems could not be resolved in any other way apart from liquidation, thus KDIC’s position changed from that of a receiver to liquidator.

Dubai Bank shareholders argued that the liquidation process was capricious and rushed and that CBK had not carried out sufficient investigations to establish whether it was possible to salvage the operations of the bank.

Mr Justice Ogola had asked CBK to check on a British Virgin Islands company, Richardson & David’s proposal, which wanted to inject Sh2.2 billion into Dubai Bank to save it from liquidation. Richardson & David had asked the court to stop the bank’s liquidation, saying the lender’s clients are willing to change their deposits into equity, which can raise Sh1 billion.

Among Dubai Bank prayers were a conservatory order restraining KDIC from carrying out the liquidation, an order asking KDCI and CBK to create a framework within which the willing depositors and creditors of Dubai Bank could convert their deposits and ownings into equity. Dubai Bank was granted the prayers as CBK lost the application.

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