Court Update: London’s  Royal Courts of Justice Starts Hearing the 16 weeks Bank Sale Trial

The trial over the transfer of Crane Bank’s business to dfcu Bank opened  this  Monday at the High Court in London, with former shareholders led by Sudhir Ruparelia seeking about £200 million in damages.

The hearing at the Royal Courts of Justice is expected to last about 16 weeks. The claimants say selected assets and liabilities of Crane Bank were moved to dfcu through an unlawful process and at a price far below the bank’s value. dfcu Bank, dfcu Limited, current and former directors, and other parties linked to the deal deny the claims.

Court papers filed by the claimants refer to an alleged $27.5 million payment tied to the sale of a portfolio of Crane Bank loans. They also say talks about a possible acquisition began before the bank was placed under statutory management.

Ruparelia and the other claimants argue that the price paid did not reflect the bank’s worth and that they lost the value of their shares and related business interests. Their claim also names Norfinance, a Norwegian investment company, Rabo Partnerships (a Rabobank subsidiary), and two former Rabobank bankers who sat on the dfcu board, Albert Jonkergouw and Willem Cramer.

 In its filings the dfcu bank says the transaction was lawful, negotiated in good faith, and carried out only after Bank of Uganda had taken control because of capital, liquidity and governance problems. It says it bought selected assets and assumed specified liabilities rather than acquiring Crane Bank as a company. The bank adds that the deal followed a process run by the central bank, allowed customers to keep access to their deposits, and helped limit wider strain on the banking system.

Greenberg Traurig represents the claimants. Freshfields acts for dfcu. Other defendants are represented by firms including A&O Shearman and Milbank. Judgment will be given on a date to be fixed after the hearing ends.

Evidence listed for the trial includes central bank examination reports, a 2016 memorandum in which Crane Bank noted significant undercapitalisation, transaction records, and expert evidence on valuation, banking rules and Ugandan law.