Stanbic Bank has received the nod to proceed with a piecemeal auction of assets of one of Kenya’s largest flower farms, Karuturi Limited to recover a Sh1.6 billion debt.
Justice David Majanja allowed the sale to proceed after declining the firm’s request to direct the lender and receiver managers to undertake the sale of Karuturi’s six land parcels together with other assets as a whole by way of private treaty.
The judge allowed the bank to sell the farm’s suit properties piecemeal saying if there will be any damage, the same can be remedied through compensation. Targeted lands are registered in the name of Surya Holdings Limited and Rhea Holdings Limited. The suit properties were used to secure loans amounting to US Dollars 6,590,000 advanced by the bank to Karuturi.
Due to default, Karuturi was placed under receivership on February 10, 2014. To forestall the receivership and sale of the suit assets, Karuturi filed a suit in court and applied for an injunction restraining the auction.
However, it eventually lost the battle last year after the Court of Appeal dismissed the appeal against refusal by High Court to grant an injunction on the intended sale.
The Supreme Court also rejected Karuturi’s bid to pursue the matter further. An audit of the receivership done to establish any further amount due and owing by Karuturi established that Karuturi owed the bank a sum of $4,028,194 and Sh2,706,994 together with contractual interest as contained in the loan agreement.
The court had also ordered Surya and Rhea to pay the bank US Dollars 6,337,120 being the sums outstanding to creditors and US Dollars 6,734,083 being monies advanced by the bank post the receivership period up to December 31, 2016. They were also ordered to pay US Dollars 978,849 expenses incurred by the bank in preserving the assets of the company from January 1, 2017, to July 31, 2017.
But jointly with the flower farm and the director of the Karuturi Group, Sai Ramakrishna Karuturi, they returned to court after the bank advertised for the sale of the assets in July 2021. The director is also the major shareholder of the group.
In asking for the sale of the assets as one whole by way of private treaty, Karuturi argued that they had obtained credible information that the bank and the receiver managers had resorted to seeking to subdivide the land and selling it in small lots.
But Justice Majanja noted that the bank’s power of sale is now beyond dispute after the Court of Appeal dismissed the appeal against the refusal by High Court to grant an injunction on the intended sale. The Supreme Court also rejected Karuturi’s attempt to pursue the matter further.
