NDIC wins N556m debt case for depositors of former Lead Merchant Bank

By Babajide Komolafe
The Nigeria Deposit Insurance Corporation (NDIC) has secured judgement against FirstBank Nigeria Limited to the tune of N556.49 million in favour of depositors of former Lead Merchant Bank Limited.

The judgement was delivered by Honourable Justice Ibrahim N. Buba of Federal High Court, Lagos in a matter instituted by First Bank of Nigeria (FBN) Plc. over a claim of indebtedness by Lead Merchant Bank (in-liquidation) to the FBN prior to the revocation of the closed bank’s licence in 2006 by the Central Bank of Nigeria (CBN).

FBN had claimed in its suit before the court that the closed bank became indebted to it under a clearing and settlement banking transaction and that as at 9th March, 2006 when the bank’s licence was withdrawn, the indebtedness stood at N556.49 million

However, the NDIC contended that it indeed recognised the FirstBank’s claim of N556.49 million indebtedness by the defunct bank, but that such a claim constituted creditor’s claim which could only be settled in strict compliance with the priority ranking of applicable Laws; and having gone through its records, the NDIC confirmed that it was yet to meet its entire obligation as a deposit guarantor by fully paying the depositors of the defunct Lead Merchant Bank.

In its judgement, the court held that FirstBank’s claim bordered on the priority of payment where a bank suspended payment or was unable to meet its obligations; this the court stated was settled by Section 54 of the Bank and Other Financial Institutions Act (BOFIA) Cap B3 Laws of the Federation of Nigeria 2004which provides thus:

“Where a bank is unable to meet its obligations or suspends payment, the assets of the bank in the Federation shall be available to meet all the deposit liabilities of the bank and such deposit liabilities shallhave priority over all other liabilities of the bank.”

The court further held that the above provision was crystal clear and that the path to follow in dealing with the assets of a bank in-liquidation was no more open to debate. In the same vein, the Court affirmed that in line with Section 55 of the BOFIA, where any of the provisions of the Companies and Allied Matters Act (CAMA) are inconsistent with the provisions of BOFIA, the provisions of BOFIA shall prevail in so far as they relate to banks and winding up by the Federal High Court.

The court therefore dismissed FirstBank’s originating summons as lacking in merits, and awarded the cost of N250,000 in favour of the NDIC.

Ikeja MAN to chart way forward for real sector growth

The need to chart a way forward for the real sector and position it to play its role as a catalyst for the nation’s economic growth will form the focus of the Manufacturers Association of Nigeria, MAN Ikeja billed to hold on Tuesday, August 1, 2017 .

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