SBM Bank has lost a bid to join a case filed by Ecobank seeking to place East African Cables Limited under receivership over a Sh190 million loan.
SBM wanted to join the case as it seeks to recover Sh285 million from the electrical cables maker and have the receivership stopped in preference for its suit where it’s seeking to liquidate East African Cables.
But Justice David Majanja ruled that being an unsecured creditor, SBM has no interest in the firm’s property secured in favour of Ecobank. The legal action has been taken under the Insolvency Act 2015, which provides directions for resolving companies unable to pay their obligations.
EA Cables is part of a group of companies owned by investment firm TransCentury and which have struggled to pay various creditors including bondholders and banks. “Neither administrator nor liquidator, if appointed in the insolvency petition would have an interest in the secured property of the company (cable firm),” the judge said. “I therefore find and hold that the SBM has not established a legally recognised interest in these proceedings. There are no common issues of law and fact and interest in relief…hence SBM cannot be joined to these proceedings,” said justice Majanja.
The cable firm is said to have obtained various banking facilities from Ecobank in 2011 and 2013, totalling to Sh350 million.
This news was Culled from Business Daily
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