The Bank of Ghana (BoG) has appointed Eric Nana Nipah, a Director of PricewaterhouseCoopers (Ghana) Limited (“PwC”) as Receiver for the purpose of winding down the affairs of the collapsed Savings and Loans and Finance Houses.
The BoG on Friday revoked the licences of twenty-three insolvent savings and loans companies and finance house companies.
According to a statement from BoG, “The revocation of the licences of these institutions has become necessary because they are insolvent even after a reasonable period within which the Bank of Ghana has engaged with them in the hope that they would be recapitalized by their shareholders to return them to solvency.”
It is the Bank of Ghana’s assessment that these institutions have no reasonable prospects of recovery, and that their continued existence poses severe risks to the stability of the financial system and to the interests of their depositors.
These actions were taken pursuant to Section 123 (1) of the Banks and Specialised Deposit-Taking Institutions Act, 2016 (Act 930), which requires the Bank of Ghana to revoke the licence of a Bank or Specialised Deposit-Taking Institution (SDI) where the Bank of Ghana determines that the institution is insolvent.”
The main duties of the Receiver are two-fold, namely:
(i) To maximise asset realisations for the benefit of Creditors including mainly Depositors and
(ii) Distribute realisations in accordance with the relevant provisions of Act 930, to satisfy the indebtedness of these institutions to their body of Creditors, to the extent possible.
In order for the Receiver to determine the indebtedness of affected S&Ls and Finance Houses to their body of Creditors including depositors, as well as the order of ranking of these Creditors for dividend distribution, as appropriate, it is the intention of the Receiver to put in place a Creditor Administration process with the following features:
(i) Submission of Proof of Debt (“PoD”) forms:
Depositors / Creditors will be required to submit their claims in the receivership of the affected S&LS and Finance Houses by completing a PoD form to be designed by the
Receiver. In filling these forms, Depositors / Creditors will be required to attach relevant documentation supporting their claim(s) as well as amounts owed to them.
(ii) Validating and agreeing claims:
The Receiver will independently verify and reconcile the claims submitted by Creditors to the records of the affected S&Ls and Finance Houses, to determine the validity and quantum of claim made by the Creditor.
(iii) Dividend payments to Creditors:
With regard to the depositors of the affected S&Ls and Finance Houses, dividend distributions will be declared and paid by the Receiver to this class of Creditors to the extent possible, on account of liquidity support provided by BoG in their favour ie depositors only.
For the class of other Creditors (excluding depositors settled under (ii)), depending on the quantum and timing of asset realisations in the receivership of the affected S&Ls and Finance Houses, the Receiver will declare and pay dividends to this class of Creditors in accordance with the order of ranking of Creditors provided in the relevant sections of Act 930.
Following his appointment, the Receiver has commenced the process of taking control over these affected S&Ls and Finance Houses, as part of the orderly winding up of the operations of these institutions.
It is the intention of the Receiver to conduct an assessment of the state of affairs of these institutions in order to ascertain the types and values of assets and liabilities of these S&Ls and Finance Houses as at the commencement of receivership.
According to the Bank of Ghana, the government has made funds available to enable the Receiver pay depositors after their claims are validated.
The Receiver will in due course make an announcement with regards to when and where payments will be made. The Receiver will also indicate documents required from depositors to facilitate the validation of claims and orderly payment of validated deposits.
Other creditors of the failed institutions will be settled by the Receiver upon validation of their claims and to the extent that the Receiver is able to realise value from the remaining assets of these institutions.