The High Court on Monday restrained TransCentury directors from transferring or dealing in more than Sh500 million raised from its recent rights issue, pending the determination of an application filed by Equity Bank.
Justice Alfred Mabeya said the firm could use funds in all other accounts but the one at Co-operative Bank for its operations and settling of liabilities. This follows an application by the lender over fears that the funds might be transferred.
The judge further said the company can use the funds it has for its operations and pay its liabilities. Trouble for the investment firm started when Equity placed it under administration, but it got a reprieve after the court stopped the process.
Equity moved to court arguing that directors of TransCentury may strip off the assets of the company, following the suspension of the receiver managers, if they are not stopped.
“The court is, however, alive to the fact that other assets such as money which is fluid in nature and can disappear with the stroke of a pen,” the judge said.
TransCentury had opposed the application, saying the lender need not worry as its assets are charged to Equity for certain facilities and they cannot be disposed of without involving the bank.
Through lawyer Philip Nyachoti, the investment firm argues that there is an ongoing plan to restructure the facility and the firm has been servicing the loan.
He said it is not in contention that all the fixed assets of the company are charged to the bank and there was nothing to worry about because the assets are encumbered.
Senior counsel Kiragu Kimani for the lender said the company raised about half a billion on the rights issue and the money went to the stated bank accounts.
“Pending the hearing and determination of the application, the applicant’s directors are restrained from transferring or dealing with the funds raised recently in the rights issue,” the judge said as he directed the company to update Equity Bank’s advocates on any undertakings it makes.
The judge further directed any steps undertaken by the lender to place the company under administration alongside its sister firm East African Cables.
Equity had appointed insolvency practitioners George Weru and Muniu Thoithi as receiver managers but they were restrained by a court order, pending the hearing of the petition by TransCentury.
The lender sought orders granting the managers unfettered access to TransCentury’s assets, offices, security keys, all company records, emails, all funds, all bank accounts, all contracts and attendant documents and all matters pertaining to and related to the business.
