Depositors of the collapsed Imperial Bank Ltd (IBL) are facing further delays in receiving their payments as a Mombasa tycoon, Mr. Ashok Doshi, has obtained court orders blocking any payments pending the resolution of his petition. The High Court suspended the payments last week, following a challenge by the Kenya Deposit Insurance Corporation (KDIC), accusing Mr. Doshi of using legal maneuvers to hinder the liquidation process for the past seven years.
Mr. Doshi, who is seeking over Sh1 billion from the defunct bank, obtained the orders blocking the KDIC from paying the protected depositors up to Sh500,000, arguing that the process is illegal. He claims that the payment of protected deposits can only be made upon the conclusion of the liquidation process, which is yet to begin according to him.
In April, KDIC issued notices regarding the payment of protected deposits while undertaking the validation of claims. However, Mr. Doshi challenged the payments, stating that instead of initiating the liquidation process, KDIC invited depositors to lodge claims and pay protected depositors. He further criticized the claim forms, stating that they impose an illegal condition requiring depositors with more than Sh500,000 not to pursue future claims.
On the other hand, KDIC has countered Mr. Doshi’s arguments, claiming that his actions are an abuse of the court process as similar issues are already pending before Mombasa courts. The corporation also expressed concerns over the financial burden the numerous court cases have on the liquidation process and depositors. It further emphasized that holding the protected deposits for an extended period would be against public policy, considering the potential impact on depositors’ financial stability.
KDIC reiterated that the payment of protected deposits is not illegal, as Section 28(2) of the KDI Act should be read in conjunction with Section 60(1) of the same Act. The corporation clarified that payment of protected deposits does not compromise payments to depositors above the protected deposit, and the law allows residual payments to depositors upon realization of the assets of the institution during the liquidation process.
The ongoing legal battle has implications for all Imperial Bank depositors, and granting the orders sought by Mr. Doshi could disadvantage other creditors of the Bank. The corporation called for a fair and transparent resolution of the case, emphasizing the importance of the depositors’ financial well-being during the liquidation process.
