The Appeal Court Decision on Afribank Winding-Up order and Follow up

Proshare

Wednesday, May 20, 2015/ 4.08pm / Share Support Service

It is no longer news that Afribank Nigeria Plc (Now Mainstreet Bank) was nationalized by the Central Bank of Nigeria along with two other banks – Bank PHB ( Keystone Bank) and Spring Bank Plc (Enterprise Bank) in 2011 and handed over to the Nigeria Deposit Insurance Commission (NDIC).

The assets and liabilities of the three (3) banks were taken over by the bridge banks in order to (according to the CBN), ensure that the banks continued to be in existence and operate under new identities while the
Asset Management Corporation of Nigeria (AMCON) later acquired the assets of those banks from the NDIC; and injected the sum of N679bn to enable these banks meet the minimum capital base of N25 billion and the minimum capital adequacy ratio of 15 per cent.

MainStreet Bank, which assumed the assets of Afribank, received N285 billion, Keystone Bank - which assumed the assets of Bank PHB, received N283 billion and Enterprise Bank - which assumed the assets of Spring Bank, received N111 billion.

In a recent Court of Appeal decision (April 28, 2015) granted by Justice Abimbola Osarugue Obaseki-Adejomo, the judge set aside the winding-up order of Afribank earlier granted by Justice C. E. Archibong, of the Federal High Court, Lagos Judicial Division, on July 2, 2012.

Justice Abimbola Osarugue Obaseki-Adejomo in his lead judgement said “in a matter between Afribank Nigeria Plc, Igbrude MosesOke, Rasaq Olalekan Mumini, Akinsanya Solomon Sunday, Sulieman Dauda Babatunde, Igba Sanni Olatomide (the appellants) and Nigeria Deposit Insurance Corporation (the respondent), the court held that “the ruling and the winding-up order of the 1st Appellant (Afribank) made by the Federal High Court, Lagos Judicial Division, C. E. Archibong J. dated the 2nd of July, 2012 is hereby set aside.”

The Appeal Court ordered that “the matter be remitted back to the lower court, and to the Chief Judge of the Federal High Court for re-assignment to another judge for hearing and determination of the petition.
The Appeal Court held that the lower court erred in law and caused Afribank to suffer miscarriage of justice by hearing and ruling on the matter on a day it had set aside for the case to be called for mention. “It is a settled law that a court cannot threat a date when a case is fixed for mention, as a hearing date and any judgment obtained in this regard amounts to a nullity.”

The Appeal Court enjoined courts to adhere strictly to rules guiding the winding-up of a company incorporated under the Companies and Allied Matters Act (CAMA), since winding-up proceedings are proceedings of a special and peculiar nature that results to in the termination of a life of a corporate body. According to the Judge, “It is of upmost necessity that courts should abide by the rules and also exercise restraint in proceedings for the winding-up of a company, hence the termination of its life.”

The Share Support Service Unit followed up on the case and her call to Mainstreet Bank was picked by a staff in their legal department who affirmed that they were not in possession of the court decision and as such declined to speak further on the matter, requesting us to send them a copy of the judgment.

Another follow up call was made to the head office of Skye Bank Plc where we were told to send an official mail to the bank which has since been forwarded to the legal unit for a formal response. We have not received the reply as at the time of this report.

Market analysts believe there is no immediate cause for concern, though it will be worth the while to pay attention to developments in the case as it goes back for trial.

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