Plans by East Africa Cables #ticker:CABL to suspend a receiver manager appointed by Ecobank over a debt of Sh190.5 million has been rejected by a judge who ruled that the company failed to show that the appointment was made in bad faith.
Ecobank on January 31 appointed Kereto Marima, as the receiver manager, to manage certain assets of the company over the debt. However, the cable firm moved to court in February, seeking to suspend the appointment.
In a ruling, however, Justice David Majanja said the company failed to establish any grounds for the court to intervene and remove the receiver.
“Either way, the company has not proved that the appointment was irregular, void or falls outside the four corners of the debentures,” the judge said.
Other than Mr Marima, the company also sought to stop Ecobank from appointing any other person as the receiver of specific assets of the cable firm, pending the determination of the case.
The company’s chief executive officer Paul Muigai said it obtained various banking facilities from the lender from 2011, which were secured by two debentures, the first one of December 2011 for Sh150 million and another in July 2013 for Sh100 million.
In March 2015, there was another debenture, making a total of Sh350 million.
And in December 2019, SBM Bank lodged a petition to declare the company insolvent. The move forced Ecobank to demand payment of Sh190,536,400. Eco bank subsequently appointed the receiver manager, triggering the application.
Mr Muigai agreed the business was not doing well but it was in the process of restructuring its operations.