BY SAM ALFAN.
The High Court has blocked Equity Bank from appointing a receiver manager to take over the management of Transcentury over a debt of Sh4.8 billion.
Justice Alfred Mabeya suspended plans by the lender appointing receiver managers to take over the management of the troubled firm, pending the determination of a petition it has filed.
“A temporary injunction be and is hereby issued holding in abeyance the actions and appointment of the 2nd & 3rd Respondents as Receiver Managers of the Plaintiff/Applicant pursuant to the Debenture dated 6th June 2013, the Supplemental Debenture dated 20th January 2014 and the Second Further Debenture dated 11th November 2014,” ordered Judge Mabeya.
The Judge further ordered the existing “status quo” between the parties prior to the appointment of the receiver managers on 16th June 2023 be maintained in order to preserve the assets of Transcentury Plc.
Equity Bank had appointed insolvency practitioners George Weru and Muniu Thoithi as receiver managers but the court suspended the plans.
The lender wanted the managers given unfettered access to Transcenturys’ assets, offices, security keys, all company records, emails, all funds, all bank accounts, all contracts and attendant documents and all matters pertaining to and related to the business.
Transcentury through lawyer Philip Nyachoti moved to court to challenge the move.
Nyachoti said the managers have since forcefully entered Transcentury’s premises and purported to take over all operations and control of the firm.
The company adds that the said unlawful and forceful takeover of the business by Weru and Thoithi has gravely prejudiced and destabilized the Transcentury’s operations and ability to continue as a going concern warranting the urgent intervention of the court.
“The said actions will also impact on the ongoing rights issue in respect of the Applicant which is intended to inject money into the Applicant so as to liquidate the subject debt,” says Transcentury Plc.
The company said it was in the final stages of finalizing the rights issue to the tune of Sh2 billion for purposes of injecting capital into its business.
The court was informed that Equity Bank was fully aware of the plans and the said injection of the capital shall be jeopardized in the event that the orders sought are not granted.
The company added that the said capital to be injected into the company would be sufficient to offset any such outstanding debt.
As such, the said appointment of Weru and Thoithi as Receivers is unwarranted and unnecessary.
Lawyer Nyachoti told the court on the other hand, the purported appointment of Weru and Thoithi as Receivers is unlawful and in utter disregard of the mandatory procedure set out in the Insolvency Act as read with the Regulations thereto. Specifically, the said appointment is premised on Section 534 as read with Section 537 of the Insolvency Act.
However, Equity Bank is not a holder of any qualifying floating charge whatsoever, since the Debentures held by the Bank were registered before 2015 and the Bank cannot therefore lawfully appoint a receiver thereunder as purported or in the manner and style it has done.
