WHAT BUSINESSES NEED TO LEARN FROM THE RECENT HIGH COURT RULING IN EDWIN TABARO (AS RECEIVER OF PAN AFRIC COMMODITIES LTD & ORIENT BANK LIMITED VERSUS MOHAMMED MOHAMMED HAMID & 2 OTHERS; MISC CAUSE NO. 34 OF 2020
Introduction
On 22nd April 2024, the High Court of Uganda (Commercial Division) delivered a Ruling in the above-mentioned matter, enforcing Sections 183 (2, 3 & 4) and 185 of the Insolvency Act. The Court reaffirmed the receiver’s authority to demand and take over charged assets and documents of tittle from an indebted company emphasizing the necessity for the debtor’s cooperation during the receivership process.
Background
On 15 November 2018, Pan Afric. Commodities (herein after called “the Company” received three credit facilities from Orient Bank (hereinafter called “ the Bank”) comprising of a letter of credit for USD 1,700,000 (United States Dollars One Million, Seven Hundred Thousand only) and two overdrafts of USD 600,000 (United States Dollars Six Hundred Thousand only) and UGX 1,000,000,000 (Uganda shillings One Billion).
The Company defaulted on the above facilities and the Bank appointed Edwin Tabaro (hereinafter called the receiver) as the Receiver which appointment was accepted by the Receiver on the 20th march 2020. Since commencement of receivership, the 1st and 2nd respondents s”) who were the directors of the company refused to avail the receiver with the charged assets and all company inventories, books of account, stocks and other assets to allow him to undertake receivership.
As a result, the receiver commenced this legal action to obtain an order from court compelling the company and the Directors to handover the above charged assets and information.
