A legal tussle is looming after the provisional liquidator of Trust Bank Corporation called on depositors to fill claim forms despite a High Court reprieve given to Trust to submit an opposing affidavit against the proposed liquidation.
At Wednesday's liquidation court hearing at the High Court, Trust's lawyer Advocate Thabani Mpofu got the reprieve on the basis that depositors will not support any liquidation process but will favour the injection of capital by an investor.
The liquidation hearing follows the appointment of Deposit Protection Corporation (DPC) as provisional liquidator and also comes a month after the Registrar of Banking Institutions had cancelled Trust's operating licence.
Trust's licence was cancelled last month after the central bank said it was abusing depositors' funds and its capital position was deteriorating.
In an advertisement on Thursday, the provisional liquidator said depositors should collect Deposit Insurance Claim Forms.
"Under its current mandate, DPC will immediately upon verification pay all depositors up to a maximum insurable limit of US$500 per depositors," DPC said.
But Trust is disputing the move arguing that DPC was not the final liquidator and that the liquidation of the bank was being challenged. The matter is set for hearing on February 18.
"The court still has to give an order either confirming you as the final liquidator or setting aside the provisional order. Your powers are therefore limited to the terms of the provisional order given by the court," Trust's lawyers wrote on Friday.
"We take it also that you are aware that liquidation of the bank is being opposed and the matter is to be heard by the [High] Court on 18 February 2014."
The lawyers said a paragraph in the advertisement by DPC suggested that it was already disposing of the bank's assets and was "therefore misleading to members of the public".
"This in turn gives the impression that a final liquidator has already been appointed. This is bound to add to the panic that has already been created among the bank's depositors," the lawyers said.
The lawyers said its client's instructions were that DPC retract "your call to depositors to claim compensation from the bank pending the finalisation of the confirmation proceedings in the High Court case".
In addition, the lawyers said, DPC should hold off any of the bank's assets in whatever form pending the finalisation of the confirmation proceedings.
It is understood that Trust has obtained assurances from depositors and employees that they are not supporting any liquidation and are waiting for new investors to come in.
A South African company, Mining Oil and Gas Services, wants to inject capital into Trust and the injection is dependent on the company getting approval from government to build a second fuel pipeline from Beira to Masasa in an investment worth close to US$1 billion.
Meanwhile, Trust has filed an application with the Administrative Court to set aside the approval made by the minister of Finance allowing the Registrar of Banking Institutions to cancel its banking licence.
The banks' Registrar said Trust had failed to meet the US$25 million minimum capital requirement and was incurring persistent losses.
It said Trust was experiencing severe liquidity challenges manifested by a negative funding gap and that its asset quality had been deteriorating.
Trust said they were summoned by the Registrar of Banking Institutions and verbally advised that the minister of Finance had authorised the cancellation of the banking licence.
Trust argued that the minister of Finance did not hold an enquiry into the matter nor hear representation from Trust when it appealed against the Registrar of Banking Institution's plan to cancel the banking licence.