Friday, December 18, 2009

Court approves liquidation of NDB. Finally!

Finally, the Patan Appellate Court has given a green signal to liquidate the troubled Nepal Development Bank (NDB). Initially, I wrote an op-ed arguing for immediate liquidation of the bank as the process was going to take too long through the usual court procedure.

The decision by the court is to allow the central bank to liquidate NDB is contrary to recommendation by chartered accountant Tirtha Raj Upadhaya, who was appointed to assess if it is necessary to liquidate the bank. However, he raised the idea that despite being in deep trouble, NDB could be revived with extra capital injection from new promoters. I also wrote another op-ed arguing that the bank should not be revived, no matter what Upadhaya recommends. And, it turned out to be exactly that way. Extremely important and a wise decision by the judges. Deserves two thumbs-up!

Issuing a verdict on the case lodged by the central bank, the court on Thursday endorsed NRB´s decision to liquidate the bank and instructed NRB to appoint a liquidator for steering the liquidation process ahead.

The court also named Chartered Accountant Narayan Bajaj as the liquidator, and instructed him to complete all tasks related to liquidation within three months.

Going by the court’s decision, Bajaj would now assess the assets of the bank and identify how much he can recoup from their disposal. Based on the amount he recovers, Bajaj will then repay its debtors.