Insolvent microfinance companies to face court

The receiver of the 347 insolvent microfinance companies whose licences were revoked on Friday, May 31, 2019, Mr Eric Nana Nipah of Pricewaterhouse Coopers (PwC), plans to institute civil action against owners of the collapsed companies to recover lost funds.

This comes as the receiver begins processes to take control of the affected companies.

A source at the Bank of Ghana (BoG) said the decision was part of the orderly winding up of the collapsed institutions.

Mr Nipah plans to complete the assessment of the assets and liabilities of the collapsed microfinance companies within 10 days.

“Any persons found to have contributed to the failure of these institutions will be reported to the law enforcement agencies for further action, including possible prosecution, where necessary,” the source said.

It said while the assessment of the debts and liabilities was ongoing, all creditors, including depositors, would be required to submit proof of debt forms and other supporting documents for validation.

The BoG has revoked the licences of 347 insolvent microfinance companies due to liquidity challenges.

Out of the number, 192 were insolvent but in operation, while 155 that were insolvent had ceased operations.

 The latest action by the BoG has left the country with 137 microfinance companies standing, from the about 566 previously.

In addition to the collapse of the microfinance companies, the licences of 39 micro-credit companies, also known as money lenders, have been revoked.

They are made up of 10 companies that were insolvent and had ceased operations and  29 other insolvent ones.

The BoG consequently appointed Mr Nipah as receiver for the specified institutions, in line with Section 123 (2) of Act 930.  

Payments to depositors

But a statement from the receiver said payments to all depositors of the collapsed companies would be made from the GH¢900 million received from the government to save depositors.

According to the statement, payments to other creditors of the collapsed finance houses would be paid from proceeds from the