NRB moves court to liquidate Samjhana
Wed, Mar 30, 2011 12:00 AM on Others,
KATHMANDU, March 30:
The Nepal Rastra Bank (NRB) on Tuesday filed an application at Patan Appellate Court for the liquidation of Samjhana Finance Company. After Nepal Development Bank, Samjhana is the second financial institution to go into liquidation.
The NRB board last week decided to send Samjhana into liquidation after its directors failed to assure the central bank of its revival. The central bank had declared Samjhana crisis-ridden on June 10, 2010, as its financial health deteriorated as a result of mismanagement and bad corporate governance.
“We registered a case at the court today for the liquidation of Samjhana,” said a senior NRB official. As per the Insolvency Act, a court decides over liquidation of any company.
According to the Act, the court sets a hearing date within 15 days after the filing of the application. Before the beginning of the hearing, the court gives seven-day time to the company concerned to submit a clarification on why it should not be liquidated.
During the hearing, the court appoints an expert to make sure whether the company should be liquidated. The court also gives the company’s shareholders a chance to express their views, organising a meeting. On the basis of the expert’s report and shareholders’ opinions, the court issues the final verdict. If the verdict goes in favour of liquidation, the court appoints a liquidator to carryout further process.
Ordinary depositors will be the first ones to get back their deposits, as per the Bank and Financial Institution Act. Other depositors (institutional) will be given second priority, while the third priority goes to tax payment, central bank loan repayment, employees’ expenses, repayment of other loans and shareholders.
Source:ekantipur
The Nepal Rastra Bank (NRB) on Tuesday filed an application at Patan Appellate Court for the liquidation of Samjhana Finance Company. After Nepal Development Bank, Samjhana is the second financial institution to go into liquidation.
The NRB board last week decided to send Samjhana into liquidation after its directors failed to assure the central bank of its revival. The central bank had declared Samjhana crisis-ridden on June 10, 2010, as its financial health deteriorated as a result of mismanagement and bad corporate governance.
“We registered a case at the court today for the liquidation of Samjhana,” said a senior NRB official. As per the Insolvency Act, a court decides over liquidation of any company.
According to the Act, the court sets a hearing date within 15 days after the filing of the application. Before the beginning of the hearing, the court gives seven-day time to the company concerned to submit a clarification on why it should not be liquidated.
During the hearing, the court appoints an expert to make sure whether the company should be liquidated. The court also gives the company’s shareholders a chance to express their views, organising a meeting. On the basis of the expert’s report and shareholders’ opinions, the court issues the final verdict. If the verdict goes in favour of liquidation, the court appoints a liquidator to carryout further process.
Ordinary depositors will be the first ones to get back their deposits, as per the Bank and Financial Institution Act. Other depositors (institutional) will be given second priority, while the third priority goes to tax payment, central bank loan repayment, employees’ expenses, repayment of other loans and shareholders.
Source:ekantipur
