The Court of Appeal has declined to allow an administrator appointed by I&M Bank to continue managing multi-billion shillings assets belonging to Cape Holdings Ltd, including the property where DusitD2 hotel stands, pending a ruling on whether her term will be extended.
A Bench of three judges of the appellate court declined to allow Vruti Shantilal Shah a temporary stay, pending their decision as to whether her tenure will be extended as requested.
Ms Shah pleaded with the court for an extension of her stay saying it was in the interest of justice and for the good of all creditors that she continues to oversee the property.
“We urge this court to allow the status quo prevailing before June 9 to stand and allow the administrator to continue running the company pending the determination of appeals before this court,” lawyer Kennedy Kithinji told Justices Asike Makhandia, Sankale ole Kantai, and Mwaniki Gachoka.
Ms Shah’s term ended in June and her attempts to seek an extension were rejected by High Court Judge Alfred Mabeya saying she had not shown what she had done for the 12 months she was in charge.
She wrote to the Office of the Official Receiver in Insolvency on June 20, of her plans to relinquish the position after Justice Mabeya declined to extend her term in a ruling on June 9.
In the letter, Ms Shah said she had been discharged from liability pursuant to the provisions of section 614 (1) of the Insolvency Act.
“In accordance with the provisions of the Insolvency Act, please note that the Administrator has made the necessary arrangements to relinquish control the operations and affairs of the Company to the directors of the company,” she said.
Ms Shah also promised to prepare a final progress report and file it with the Official Receiver’s office.
“Please note that this filing constitutes a discharge of the duties of the Administrator under section 602 (2) of the Insolvency Act,” Ms Shah said.
She followed the letter with another one on July 6 notifying the parties that she had updated the Registrar of Companies of the changes.
The property was charged to the bank over a loan of Sh2.82 billion and it is, at the same time, being claimed by Synergy Industrial Credit Ltd over a debt of Sh5.5 billion arising from a botched deal for the purchase of a block in the complex, over a decade ago.
The plea was supported by lawyer William Kabaiku for the lender stating that the court has the power to extend the term to meet the ends of justice.
However, senior counsel Ahmednasir Abdullahi for Synergy Industrial Credit opposed the extension saying the court has no such powers. The lawyer said there has been no chaos for the five months in which there has been no administrator.
According to Mr Abdullahi, the term of an administrator is fixed for 12 months and is not subject to an extension.
The lawyer further added that it was wrong for the administrator to seek the extension of her term without the authority of the directors of the company after it emerged that she had relinquished the control and affairs of the firm.
