The High Court has suspended the auction of the White Rhino Hotel, Nyeri, that had been slated for today.
In the orders issued by Justice Florence Muchemi, KCB Bank and Garam Investments Auctioneers are barred from selling the hotel and its assets pending the determination of a suit.
“The auction will be stayed on condition that the hotel management deposits Sh50 million into the KCB Bank account within 30 days in respect to its outstanding loan,” said the judge while also certifying the suit as urgent.
The judge gave the directive after the hotel through its management – the Cedarwood Hotels and Resorts Investments Company – moved to court on Tuesday seeking injunction orders against the bank and Garam.
Garam had placed a notice in the dailies on May 16, advertising a public sale of the three-acre property following the hotel’s outstanding land rates of Sh1.2 million as of July 2021.
The advert required interested investors to deposit Sh10 million by cash or bankers cheque before being allowed to bid.
Cedarwood Hotels and Resorts Investments through its lawyer Tom Macharia told the court that the intended sale was unlawful as the property had been undervalued.
“The valuations done by the respondents are contrary to section 97 (3) of the Land Act, which provides that if the price at which the charged land is sold is 25 per cent or below the market value, the charge is in breach of the duty of the care owed,” Mr Macharia said.
Cedarwood Hotels and Resorts Investments director, Patrick Munene, said in an affidavit that his team has conducted five appraisals since March 2016 which indicate that the prime property is highly valued. The latest appraisal was in February, he said.
According to Mr Munene, the valuation report prepared in 2022 showed the estate cost more than Sh1.15 billion with a recorded forced sale value of at least Sh862 million.
“The alleged appraisal report that is being relied upon by the bank shows the property has a market value of around Sh840 million and a forced sale value of over Sh630 million which is ill-conceived,” he said.
Mr Munene said if the auction goes on, the amount realised will not cover the loan as it is still accruing interest.
