Co-op Bank Threatens Sale of Sony Sugar Property Over Ksh862M Debt

South Nyanza Sugar Company is facing the possible loss of a property after Co-operative Bank of Kenya moved to enforce a charge securing a loan of more than Ksh 862 million.

The bank has issued the sugar miller with a 40-day notice of its intention to sell Land Reference No. 16339/1 if the outstanding debt is not settled.

In a notice dated July 14, 2026 and addressed to Sony Sugar’s chief executive officer, Co-operative Bank said the company owed Ksh 862,328,980.41 as at the date of the notice.

The lender said the amount arose from a lending facility extended to South Nyanza Sugar Company, with the loan secured by a legal charge over the property registered in Sony Sugar’s name.

“As you are fully aware, and despite the notice mentioned above, you have not rectified the default, and you owe the Bank the sum of Ksh 862,328,980.41 as of 14th July 2026 in respect of a facility granted to South Nyanza Sugar Company Limited,” the bank said.

The notice follows an earlier 90-day statutory demand issued on August 13, 2025, after the company allegedly failed to correct the default.

Under Kenya’s Land Act, a lender can move to realise charged property after a borrower remains in default and fails to comply with the initial statutory notice. The law then requires the lender to issue a further notice of at least 40 days before completing a sale of the charged property.

This means Sony Sugar has a limited window to settle the debt or reach an arrangement that prevents the bank from proceeding with the sale process.

Co-operative Bank also said the facility is backed by a First Ranking All Asset Debenture, giving it additional security over the company’s assets.

The lender warned that any payments or repayment arrangements made after the July 14 notice would not automatically stop enforcement action.

“Please note that any repayment arrangements entered into between yourselves and the Bank and/or any payments made by you after the date of this notice shall be accepted by the Bank strictly on account and without prejudice to the Bank’s right to proceed and realise its securities as aforesaid,” it said.

The development adds to the financial difficulties that have surrounded Sony Sugar for years. The company’s previous audited accounts showed significant borrowing, including a Co-operative Bank loan of about Ksh 863 million as at June 2022.

The Auditor-General has also previously raised concerns about the company’s financial position, including long-outstanding payables and numerous legal cases that could expose its assets to further claims.

Sony Sugar was leased to Busia Sugar in May 2025 for 30 years as part of the government’s programme to revive struggling state-owned sugar companies.

The government’s leasing arrangements, however, have not erased the financial obligations accumulated by the companies before the takeover. Earlier this month, several businesses moved to court seeking Ksh 173.58 million they said was owed by Sony Sugar and two other leased state-owned mills.

The Co-operative Bank notice does not mean the property has already been sold. Sony Sugar still has the period provided in the notice to clear the outstanding amount before the lender can proceed with the next stages of enforcement.