Mwalimu Sacco Teachers Could Incur Sh11b Loss On Spire Bank Liquidation
According to a petition filed in the High Court, Mwalimu Sacco could incur a Sh11.1 billion loss in liquidating Spire Bank.
Mr Keneth Otieno, a teacher from Siaya County and a member of the Sacco, filed a lawsuit alleging that the co-operative failed to provide full disclosure about the immediate financial implications of exiting Spire Bank.
The petitioner accuses Sacco of relying on a “material non-disclosure” to persuade its delegates and members to vote for the resolution to voluntarily close the loss-making bank.
He wants the High Court in Kisumu to halt the process, potentially saving Spire’s existence but dealing a blow to the Sacco, which had hoped to exit the lender by the end of March.
According to the suit, Mwalimu Sacco failed to inform members that it was required by law to inject about Sh2 billion into Spire Bank to make it solvent before proceeding with the voluntary winding-up process required by the Insolvency Act, 2015.
Mr. Otieno claims that the liquidation would result in the Sacco incurring a loss of Sh9.1 billion in authorized and issued share capital.
“The decision by Respondent 1 (Mwalimu Sacco) to voluntarily liquidate No 2 (Spire) by March 31, 2022, is rash and premature apart from being unlawful, and further, the financial ramifications of the same have not been adequately considered by Respondent 1 to the detriment and prejudice of its members,” the suit says.
Mwalimu’s authorized and issued share capital in Spire was Sh5.77 billion in September 2021, but it increased to Sh9.1 billion after converting Sh3.4 billion in deposits into share capital.
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“(Mwalimu) will ultimately be compelled to take a huge hit in its financials once these losses are booked hence creating additional losses for its members,” Mr Otieno argues.
The suit was filed on March 17, and the court ordered the respondents, Mwalimu Sacco and Spire, as well as interested parties Central Bank of Kenya and Sacco Societies Regulatory Authority, to file responses within seven days before the April 11 hearing.
Mwalimu Sacco Teachers Could Incur Sh11b Loss On Spire Bank Liquidation
