Judgment on Afribank does not affect Skye Banks’ acquisition of Mainstreet Bank

Proshare

Thursday, May 21, 2015 8:45 AM / Skye Bank Position

Our attention has been drawn to media reports on the recent Court of Appeal ruling reversing the order of Archibong J (rtd), winding up Afribank PLC, and remitting the matter to the Federal High Court for trial by another judge.

We wish to clarify that the order of the Court of Appeal does not affect Skye Bank’s acquisition or interest in Mainstreet Bank in any manner whatsoever. Although Mainstreet Bank acquired the assets and certain of the liabilities of Afribank, Mainstreet Bank itself is a totally new bank, having been newly incorporated by the Corporate Affairs Commission, and issued with a new banking license by the CBN. It is therefore not an offshoot of Afribank.

The connection between Afribank and Mainstreet is that Afribank sold its assets and certain of its liabilities to Mainstreet Bank. This was done under a Purchase and Assumption Agreement validly entered into between the two parties.

This Purchase and Assumption Agreement, and the transactions done under it were not the subject of dispute in the suit before the Court of Appeal, and thus was not pronounced upon or affected by the decision.

Indeed, the status of Afribank PLC does not affect the rights over the assets and liabilities validly acquired from it by Mainstreet Bank under a commercial transaction before the petition to wind up the Bank was presented to the Court.

It is also important to note that in any event, the Court of Appeal did not decide on the merit of the dispute, being the petition to wind up Afribank. Rather, the Court of Appeal decided the appeal on a procedural matter, to wit: the impropriety of issuing the winding up order on a date when the case was scheduled for mention, and when the counsel to the Claimants was not present in court, contrary to well settled principles of law in that regard.

It thus invalidated the winding up order, without deciding the merits of the case, and directed that the merits of the case challenging the petition for winding up of the Bank be remitted back to the Federal High Court for determination.

The outcome of the substantive case (whenever it is decided), would also not have any effect on the interests acquired by Mainstreet Bank in the assets of Afribank.

Editorial Note:
We thank officers and management of Skye Bank Plc’s legal and communication units for consistently responding to enquiries and providing information/clarification on issues affecting investors and the market; and for regarding the ‘right to know’ principle in corporate governance. – The Share Support Services .

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