The High Court has declined to extend the term of an administrator appointed to manage the property where DusitD2 Hotel stands, for another 12 months saying the manager has been unable to show what she has achieved so far.
Justice Alfred Mabeya ruled that Ms Vruti Shantilal Shah, who was appointed by I&M Bank to manage Cape Holdings Ltd (CHL), did not demonstrate that the objectives of the administration had been met or that she deserved an extension.
The property was charged to the bank over a loan of Sh2.82 billion and Synergy Industrial Credit Ltd had opposed the extension of the term of the administrator saying she was not serving the interests of other creditors.
“As I have already stated, the administrator was quiet in her affidavit on what she had done for the past 12 months. She never stated what she intended to do if the administration was extended for the next 12 months,” he said.
The judge said there were claims that CPL was able to pay its debts and that it was also diverting surplus finances to develop some property owned by third parties.
Justice Mabeya said the evidence was laid before the court and the same was neither challenged nor denied.
Synergy Industrial Credit Ltd and the lender have been wrangling over the property after CPL was placed under administration.
Whereas Synergy Industrial Capital Ltd wants to auction the property over a debt of Sh5.5 billion, the lender argues that it should be given priority as the property has been charged to it.
Justice Mabeya, however, suspended his decision for seven days from the date of the ruling, to enable I&M Bank to move to the Court of Appeal.
The judge said he expected the administrator to set out all that she had done during the first 12 months and stated the challenges if any, successes achieved, and the way forward.
This, he said, would enable the court to determine whether the extension sought was likely to achieve the purpose of administration.
According to Justice Mabeya, the administration was not a holiday camp but a busy workshop towards achieving the objections of the Insolvency Act.
“The court makes a finding that this is a clear case where the administration of being used to safeguard the interests of the bank only and shield the company from its obligations to the rest of the creditors,” the judge said.
Through senior counsel Ahmednasir Abdullahi, Synergy Industrial Capital Ltd argued that the administration intends to ensure the company remains under administration because as an appointee of the bank, she had no obligation to other creditors.
The bank through William Kabaiku opposed the application saying cases are pending before the Court of Appeal challenging the decision to auction the property, among others.
