KCB Group #ticker:KCB has been barred from selling any movable assets of indebted Mumias Sugar amid creditors’ fears that the lender look set to dispose of some properties to recover Sh545 million loan
Justice Alfred Mabeya restrained KCB receiver—Pongangipalli Venkata Ramana Rao—from selling part of Mumias Sugar following a court petition from 100 creditors owed billions by the troubled miller.
The judge however, said the order does not prevent Mr Rao from operating the company and selling products like sugar, electricity and ethanol that are meant to keep the company in trading position.
The receiver is seeking to lease the firm in the latest revival bid and has received bids from eight investors including steel tycoon Narendra Raval.
Under the leasing deal, the successful firm will run the plant on behalf of KCB for up to 15 years and will pay the lender monthly leasing fees.
“That in the interest of justice and for the company to remain afloat up to the time of hearing and determination of these proceedings, the receiver manager and all concerned ae hereby restrained from any disposal of any movable assets of the company,” Justice Mabeya said.
The more than 100 creditors said the manager PVR Rao has undermined the due process as he is not answerable to neither the management of the company nor creditors who have been holding meetings with plans to revive the company. The insolvency case was initially filed by lawyer Jackline Kimeto who is demanding Sh76 million from Mumias.
Some 100 creditors later joined the case. They include Statec, an Austrian Packaging company, Victoria Furnitures, Westlink Electricals and Hardware and Lesphine Investments ltd, a sugar distributor, who allegedly paid Sh26 million in advance for sugar supplies but was never supplied.
The struggling miller was placed under administration in September after it defaulted on loans amounting to Sh545 million owed to KCB.
The millers’ loans stood at Sh12.5 billion at the end of June 2018. Apart from KCB’s Sh545 million, it also owes Ecobank Kenya (Sh2 billion), French development finance institution Proparco (Sh1.9 billion), which financed the construction of the power plant a Mumias and Commercial Bank of Africa (Sh401 million).
