29 March 2011

Commercial Bank Sues Lion for Insurance on Debtor’s Property

Commercial Bank Sues Lion for Insurance on Debtor’s Property : Commercial Bank of Ethiopia (CBE) has sued Lion Insurance SC for a little over three million Birr over an alleged insurance policy for natural disaster damage to a property Anano General Trading Plc acquired with a loan from the bank, which it failed to pay.

The dispute arose when Anano took a mortgage on its animal fattening company from CBE, which registered a record gross profit of 2.8 billion Br in the 2009/10 fiscal year.

The animal fattening company, located on a 50,000ht plot located in Metahara Town, Oromia Regional State, was insured against incidents of fire, earthquakes, wind, lightning and rain storms, as well as floods for 3.2 million Br during the 2008/09 and 2009/10 fiscal years, read the charge filed at the Federal High Court, Ninth Civil Bench on March 10, 2011.

However, the debtor, Anano, did not pay its debts to the bank, which is authorised, in that case, to sell the mortgage, claimed Yosef Kewiye, lawyer for CBE, which has cut down its nonperforming loans (NPLs) to 1.7pc of its total loans and advances from 3.9pc in the previous fiscal year.

It also claimed to have visited the animal fattening company during the 2009/10 fiscal year to evaluate the property and take pictures of the facilities along with wereda officials and police officers. However, the facilities had been destroyed by floods at the time, it alleged.

Lion Insurance, which was established with a capital of a little over 16 million Br in 2007, was notified in writing of these facts by CBE within five days of the latter learning them, it claimed. Following this initial notice, the insurance company, was notified other two times, the plaintiff alleged.

On February 12, 2011, the insurer contested that the company the CBE employees claimed to have visited was not the company owned by Anano General Trading Plc.

However, the bank employees have confirmed that the destroyed facilities belong to the debtor, the charge read.

CBE, which attached 43 pages of documentary evidence and 10 witnesses to their case, is demanding that the insurer pay the amount owed by Anano, including damages for the period in which the bank was not paid.

Lion Insurance was ordered to submit a response to the charges to the registrar’s office by April 4, 2011, by Ayeshesume Melese, the presiding judge, who adjourned the hearing to April 11. source addisfortune.com...

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