BY SAM ALFAN.
Equity Bank has suffered a major blow after the High Court blocked its receiver managers to take over troubled firm East African Cables Company.
High Court judge Alfred Mabeya issued a temporary injunction stopping the appointment of George Weru and Muniu Thoithi as administrators of the cables company.
“The existing “status quo” between the parties herein as at the date immediately prior to the appointment of Weru and Thoithi on 16th June 2023 be maintained in order to preserve the assets of the East African cables company,” ordered Judge Mabeya.
The firm challenged the appointments saying the acts of the lender are unlawful.
The company through veteran lawyer Philip Nyachoti had also sought the court to restrain Equity Bank from denying the directors and authorised officials of East African cables company unfettered access to offices, assets, offices, security keys and all company records.
“Unless this Application is certified urgent, heard immediately and the orders sought herein granted, Weru and Thoithi will continue to run the affairs of the company pursuant to the said unlawful appointment over the company and thereby totally cripple and destabilize the company s’ operations and particularly the massive on-going construction contracts in various parts of the country as well as in other countries in Africa and will thereby occasion and subject the company to massive financial loss and damage,” lawyer Nyachoti told the court.
The company further seeks the court to issue permanent injunction restraining Equity Bank from appointing Administrators or exercising its powers pursuant to Section 534(1) of the Insolvency Act 2015 or the Debenture dated 18th March 2019 between the cables company and the lender.
Equity appointed the joint administrators on 16th June 2023, who allegedly forcefully entered the company’s premises and purported to take over all operations and control.
He added the said unlawful and forceful takeover gravely prejudiced and destabilized the company’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,” Lawyer Nyachoti told the court.
Lawyer Nyachoti further told the court that the company through its holding company Transcentury PLC is in the final stages of finalizing rights issue to the tune of Sh2 billion for purposes of injecting capital into its business in order to liquidate the debt.
He said Equity Bank was fully aware of plans but has rejected the pledge without any good ground.
Nyachoti said the injection of the capital shall be jeopardized in the event that the orders sought are not granted.
He said the capital to be injected into the company will be sufficient to offset any such outstanding debt to Equity Bank and keep the company’s business afloat.
“As such, parties have been in extensive negotiations with a view to reconciling the company’s account and determining the actual outstanding amount with the last correspondence being the letter dated 12th June 2023 from the Equity Bank requesting for more information from the company’s Holding company hence the Appointment is pre mature and in bad faith,” lawyer Nyachoti told the court.
