The Bank of Africa scored a big win on Tuesday after the High Court allowed the lender to auction former Nakumatt CEO Atul Shah’s property worth Sh2 billion to recover loans advanced to the now-defunct retailer. The Business Daily reported on Wednesday.
In January, Mr. Shah had claimed that he was not in a position to pay Nakumatt’s creditors and suppliers who watched helplessly as the retailer collapsed with some Ksh30 billion owed to them stating that he was financially distressed.
Fast forward to now, BoA becomes the first lender to seize Mr. Shah’s property while other creditors are still baying for his blood.
The High Court gave Bank of Africa the nod to auction the property, registered under the name of Collogne Investments on August 24 to recover Sh700 million advanced to the collapsed retail chain. Collogne Investments is owned by Mr. Shah.
Various creditors have stepped up attempts to recover money owed to them and are targeting assets worth Ksh3.68 billion linked to Mr Shah and his family targeted for seizure.
Justice Mary Kasango dismissed an application by Collogne Investments to stop the auction by BoA. Collogne Investments argued that the property was used as security for other loans and that it would lose office space if the auction were allowed to proceed.
The company told the court the forced sale of the office block in Nairobi’s Industrial Area will expose it to legal suits from third parties who have rented space in the property.
Nakumatt owes Diamond Trust Bank (Ksh3.6 billion), Kenya Commercial Bank (Ksh1.9 billion), Standard Chartered (Ksh900 million), Bank of Africa (Ksh328 million), United Bank of Africa (Ksh126 million) and GT Bank (Ksh104 million), according to a document shared by the collapsed retailer’s administrator Peter Kahi.
“Bearing what is before me I am of the view that the plaintiff has failed to demonstrate that its appeal is not frivolous and I do find that the defendant bank stands to suffer greater hardship if an injunction is granted since the debt is not being serviced,” Justice Mary Kasango said.
BoA in its submissions had argued that the auction is not illegal since Nakumatt was an unlimited company.
Nakumatt was folded up on January 7 after creditors voted to dissolve it and share the proceeds from the sale of the retailer’s assets after attempts to resuscitate the retailer flopped.
However, the lenders are still pursuing properties and bank accounts linked to Mr. Shah, especially outside Kenya, to recover the billions lent out to the collapsed retailer.