KCB Group #ticker:KCB has won the fight with three other banks seeking to auction a prime property belonging to the CEO of fallen retail giant Nakumatt, Atul Shah, over a Sh2 billion debt.
High Court judge Alfred Mabeya on Tuesday allowed KCB to complete the sale of the property in Industrial Area, Nairobi that is also charged to Bank of Africa, DTB Bank #ticker:DTB and Standard Chartered #ticker:SCBK.
This allowed KCB to press for a speedy auction, fearing an appeal would open the window for rival lenders to scuttle its claim on the asset.
The bank sold the property to Furniture Palace International Ltd for Sh1.04 billion, taking a loss of about Sh1 billion.
The sale deal was set to be completed on Wednesday.
The judge questioned the credit appraisal of the lenders, wondering how multiple banks would offer loans worth Sh4 billion based on a single security valued at less than Sh2 billion.
“If the court was in doubt, which is not the case here, the balance of convenience tilts in favour of allowing the defendant (KCB) to recover its outlay,” said Justice Mabeya.
“The court was invited to consider that the sale by the defendant would injure and prejudice the rights of the other lenders who have the suit property as their only security. While this court sympathises with the said lenders, it defeats logic how prudent bankers would extend facilities amounting to over Sh4 billion on a single security whose value is less than Sh2 billion.”
In August, Bank of Africa got the court’s nod to auction Mr Shah’s personal property over loans offered to the collapsed retailer, but the former Nakumatt boss blocked the sale at the Court of Appeal.
KCB argues that it was not party to the Court of Appeal suit and that its absence in the case does not block it from selling the land.
Nakumatt owes Stanchart and DTB Bank a combined Sh4.5 billion and court documents show that they were also eyeing the Sh2 billion property.The banks offered Nakumatt billions of shillings on the strength of the retail chain’s cash flow.But Mr Shah used his company Collogne Investments, which owned the Sh2 billion property in Nairobi, as Nakumatt’s guarantor to offer additional comfort to the multiple bank loans.The banks have been battling to seize assets linked to Mr Shah and his family to recover the billions of shillings lent to Nakumatt.The former Nakumatt CEO had sought orders stopping the auction […]
