Five properties linked to businessman Ahmed Mwinyi Shimbwa are set to go under the hammer after his logistics company defaulted on a Sh320.2 million loan borrowed nine years ago.
The five properties, including Mwinyi’s two residential homes which had been used to guarantee the facility from Diamond Trust Bank (DTB), will be auctioned on August 27, said Dalali Traders Auctioneers in a public notice.
The auction is the latest chapter in a long-running debt recovery battle between Diamond Trust Bank and Panal Freighters Limited, a transport and logistics company associated with the trader.
The facilities, approved in October 2017, comprised a term loan of Sh320.229 million and an overdraft facility of $250,000 (about Sh32.3 million), secured by several properties as well as personal guarantees from Mr Mwinyi and fellow director Zahra Said Amin.
The five properties include two residential homes on Mombasa Island owned by Mr Mwinyi, which the trader used to guarantee the loan advanced to Panal Freighters.
The first of Mr Mwinyi's properties is a residential bungalow sitting on a 0.0302-hectare (0.0746-acre) parcel in Mombasa's Umoja Estate, about 80 metres off Kongowea Road and 180 metres off Nyali Road, according to Dalali Traders.
It is developed with a single-storey permanent residential house, "registered in the name of Ahmed Mwinyi Shimbwa g/t Panal Freighters Limited", according to the auction notice.
Mr Mwinyi also owns a block comprising two apartments off Haile Selassie Avenue in Mombasa, which was also used to guarantee the loan.
According to court records, the company fell into financial distress in 2019 and failed to service the facilities, prompting negotiations with the bank to restructure the debt.
The company admitted experiencing cash flow challenges, but efforts to regularise the account failed, leading the lender to invoke its statutory power of sale.
The High Court in Mombasa, in a ruling delivered in January 2023, declined to stop the bank from selling one of the charged properties after finding that Diamond Trust Bank had substantially complied with the legal requirements before commencing the recovery process.
The court held that the company had admitted being in default and dismissed its application for an injunction, effectively clearing the way for the bank to continue recovering the debt.
Two other properties are owned directly by Panal Freighters, a company linked to the trader, while the remaining one is registered in the name of White Rose Properties, which also guaranteed the loan.
The official receiver was appointed liquidator of the company on November 7, 2023, with creditors invited to lodge their claims under the Insolvency Act, 2015.
Court filings show the company argued that the bank had moved to auction the securities before exhausting restructuring efforts and questioned whether all the statutory notices had been properly served.
Diamond Trust Bank, however, maintained that it had repeatedly accommodated the borrower, issued the required notices, and that the outstanding debt had continued to accumulate after years of default.
The bank told the court that by July 5, 2021, Panal Freighters' amalgamated loan portfolio had risen to about Sh751.8 million, including accrued interest and other facilities, arguing that its statutory power of sale had crystallised after the borrower failed to regularise the account despite several extensions.
Panal Freighters Limited, a logistics and freight forwarding company, was founded in 1994.
