High Court approves $16mln Allied Bank claims, assets worth millions in dispute

High Court approves $16mln Allied Bank claims, assets worth millions in dispute

HARARE, July 20 (The Source) – The High Court has approved claims by collapsed Allied Bank creditors worth $16 million while assets valued at nearly $17 million are currently in dispute, the bank’s liquidator said on Wednesday.

Allied Bank, majority owned by a vehicle linked to investment promotion minister, Obert Mpofu, had its license cancelled by the Reserve Bank of Zimbabwe in January 2015 after it was found to be in an unsafe financial position.

At its closure, the financial institution had a core capital of $3,14 million against a regulatory minimum of $25 million and had unsuccessfully tried to mobilise more funding.

When its liquidation was approved last February, it was estimated the bank had assets worth $26 million while liabilities stood at over $34 million.

The Deposit Protection Corporation (DPC), which was appointed as the bank’s liquidator, said in an update on the liquidation process the Master of the High Court had to date approved claims worth $15,7 million submitted after three creditors meetings held since the institution’s closure.

“As at 30 June 2016, about $824,596 had been recovered being $240,000 collected from the various debtors and $584,596 realised from the disposal of government stocks and movable assets,” said DPC chief executive, John Chikura.

Funds recovered from the process are being used to pay depositors who had their funds locked in the failed bank.

Chikura said rate of recoveries and disposal of assets were being delayed due to a dispute over $16,7 million worth of assets which is in the courts while some loans had been granted to debtors without security.

The $16,7 million dispute relates to properties which the DPC insists the majority shareholder had failed to hand over to Allied Bank before its closure.

A distribution account of funds so far recovered was currently being prepared and would be submitted to the High Court for approval, Chikura said.

“Only preferred creditors will be paid from the first distribution due to the low rate of recoveries,” he said.

“Liquidation dividend to unsecured or concurrent creditors will be paid on a pro-rata basis depending on the rate of recoveries.”

Following the bank’s closure, the DPC paid out over $1 million to depositors in line with its mandate, which at the time, gave the institution powers to immediately pay-out an initial maximum of $500 per depositor affected by the closure.

The limit has since been increased to $1,000 per depositor per account effective June this year.