High Court bars Transcentury from withdrawing Sh500 million in Equity account

High Court on Monday issued orders restraining Transcentury directors from withdrawing, transferring or utilizing more than Sh500 million raised from their recent rights issue.

The decision was issued in response to an application filed by Equity Bank in which it raised concerns that the company could potentially transfer the funds held at Cooperative Bank.

In his ruling, Justice Alfred Mabeya outlined that, while Transcentury could access funds in all its other accounts, it is forbidden from utilizing the funds held at Co-operative Bank.

The decision by the High Court in Nairobi now permits the investment company to continue with its business operations while also meeting its financial liabilities.

Equity had told the court it was fearful that the funds might be transferred by Transcentury, which the bank had placed under receivership in a process halted by the court temporarily.

The bank argued that if Transcentury directors were not barred, they would attempt to strip the firm’s assets after it obtained orders suspending appointment of receiver managers.

“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,” said Justice Mabeya.

The justice issued the orders despite Transcentury, via its lawyer Philip Nyachoti, opposed the application and sought to assure the court that Equity had nothing to worry about.

The lawyer argued that Equity held charges over the company's assets for specific facilities advanced to it, which made it impossible to dispose of the said assets without involving it.

Equity’s advocate Kiragu Kimani said Transcentury successfully raised about Sh500 million through its rights issue and the funds had been deposited into designated bank accounts.

The company’s directors are barred from transacting in the said amount until the application they filed objecting to being put under administration is heard and determined.

Additionally, the investment company was instructed by the court to keep Equity Bank's legal representatives fully informed of any undertakings it is making during this period.

On June 16, Equity appointed receiver managers to Transcentury and East African Cables, which the investment firm has majority stakes in, over an unsettled Sh3.01 billion loan.

Equity sought orders allowing its receiver managers limitless access to the firm’s assets, offices, security keys, company records, emails, bank accounts, contracts and other documents