The High Court in Blantyre has blocked the Reserve Bank of Malawi (RBM) from proceeding with distribution of realised assets of the liquidated Citizen Insurance Company.
This follows an ex-parte injunction obtained by Yotam Jere, through lawyer Chancy Gondwe, at the High Court Commercial Division last week on behalf of Citizen Insurance Company employees.
RBM, whose governor was appointed liquidator of the insurance company, was scheduled to start the distribution of the assets on Monday this week to claimants.
“It is hereby ordered and directed… that an order of an interlocutory injunction be and is hereby granted restraining the distribution of the realised assets by the liquidator of Citizen Insurance Company Ltd (in liquidation) scheduled to start on 29 May 2017 up until the hearing and determination of the originating summons or till further order of the court,” reads part of an order by Justice Michael Mtambo.
The judge also asked the plaintiff to file inter-parte summons for an injunction to be heard on June 5 2017.
In an interview, Gondwe said the employees were aggrieved by the decision of the liquidator by failing to correctly interpret Section 72 (8) of the Financial Services Act.
“They could not proceed with the distribution of the realised assets as planned since the matter is now in court because of the injunction,” said Gondwe.
RBM spokesperson Mbane Ngwira also confirmed yesterday that the central bank could not proceed with the exercise because of the injunction.
He said the distressed employees brought up the issue of pension which has now been left with the courts to interpret the section.
“We have got the injunction so there isn’t anything for us to do until the issue is resolved by the court. On our part, we interpreted the legal requirement,” said Ngwira.
RBM wanted to start the distribution in pursuant to the Malawi Supreme Court of Appeal winding up order of August 20 2014 when the insurance was placed under liquidation.
The insurance firm was in 2011 found by RBM to be in gross breach of the Financials Services laws as management and shareholders failed to address a number of issues that potentially threatened the interests of policy holders and the public.
The Supreme Court of Appeal then appointed RBM governor who is also registrar of financial institutions (then Charles Chuka) as liquidator of the process.
A summary of assets the liquidator realised during the process included houses, vehicles, shares, office furniture and equipment, reinsurance receivables and beginning cash balance totaling K141.52 million against the recorded total insurance claims of K795.51 million. n