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The Ksh20m Equity Bank loan that Esther Passaris won’t pay

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One of the most colourful women in Kenya’s business circles and politics faces the prospect of being declared bankrupt for failing to pay up millions of shillings she owes several creditors.

Esther Passaris, the founder of Adopt A Light advertising company, has been facing financial difficulties over the past couple of years after her firm ran into headwinds. Her woes, and in fact those of Adopt A Light, can be traced back to 2006 when the Nairobi County Council pulled down her advertising poles, a move that put her at odds with her clients.

Chief, among them, was Equity Bank with which she had entered into a Ksh35.6 million contract in 2006 to provide advertising services in Nairobi through billboards.

However, before the 361 advertising sites could be full set up, City Hall withdrew her licence and began pulling down the billboards put up by Adopt A Light, which was forced to go to court where it filed a suit in the High Court Civil Case No. 637 of 2006 on November 21, 2006, a mere 16 days after the signing of the contract.

According to court documents seen by Business Today, as the case persisted, City Hall wrote to Equity Bank on March 3, 2008, demanding that the financial institution pays Ksh7, 808,000 comprising of licencing fees of Ksh7,320,000 for the years 2007 and 2008 and Ksh488,000 application fees within seven days.

However, the court documents show, despite City Hall frustrating the bank’s marketing plan, Adopt A Light filed an arbitration claim seeking to be paid Ksh30,959,606.48 with interest from June 22, 2009. After adjudication by four arbitrators, the panel ruled in favour of Adopt A Light on June 25, 2013. Equity Bank was directed to pay Passaris’s company the amount plus interest and costs.

The amount and costs were settled by Equity Bank on February 11, 2015, through Issa and Company Advocates at its NIC Bank head office branch account.

It has, however, emerged that despite paying the money, Equity Bank is still embroiled in a court battle with Adopt A Light, Passaris and her partner, Philip John Ransley, in which it is seeking payment of Sh20, 647, 541.32.

According to the court documents we have independently obtained, the dispute arose after the Adopt A Light failed to fully meet its obligations under various debentures, guarantees and indemnities with respect to various credit facilities from Equity Bank.

Esther Passaris: Adopt A Light founder.
Esther Passaris: Adopt A Light founder.

The facilities included a Ksh20 million offered on March 10, 2006, to facilitate working capital requirements and liquidate an outstanding overdraft facility with another bank as well as an overdraft of Sh4 million offered on June 22, 2006, to finance month end working capital requirements.

On August 30, 2006, Adopt A Light was also offered a temporary overdraft facility to meet shortfalls in debt collections. Equity Bank also extended an LPO financing facility of Ksh30 million on November 6, 2006, to finance LPOs awarded by the City County of Nairobi for installation of 281 high masts.

Adopt A Light then obtained another loan facility of Ksh60 million on May 6, 2007, of which Sh55 million would be used for rephasement of existing facilities and Ksh5 million to be used as overdraft.

According to court papers filed on October 31, 2013, Adopt A Light never serviced the facilities and they fell in arrears, forcing Equity Bank to, on April 7, 2007, demand payment of Ksh29, 707,176 accruing penalty interest of 6 per cent above the prevailing 18 per cent until settlement in full.

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In its plaint, Equity Bank further revealed that through a letter dated October 4, 2010, and a board resolution of September 29, 2006, Adopt A Light made an application to have the loan restructured on admission of being in arrears of Ksh21 million. It adds that Adopt A Light has failed to pay the debts due under the loan facilities.

“The plaintiff avers that as at 30th September, 2013 the sum indebted under loan account no. 018059093753 is Ksh20,619,205.12, which continues to accrue interest at the rate of 18% and default interest at the rate of 6% per annum,” it says.

In addition, Equity Bank says that Adopt A Light’s current account was overdrawn up to Ksh28,336.20 as at September 30, 2013 and continued to accrue interest at the rate of 20 per cent and default interest at the rate of 6 per cent per annum.

The case is pending in court with the next hearing scheduled for January 16, 2017.

The debentures, guarantees and indemnities used to secure the facilities are as follows:

  • On April 6, 2006, Adopt A Light made a debenture that was registered on April 11, 2006 to secure an overdraft facility of Ksh10 million and a loan facility of Ksh20 million.
  • A further debenture was made on June 2, 2006 and registered on June 30, 2006 securing overdraft facilities of Ksh10 million and a loan facility of Sh20 million making an aggregate of Ksh30 million.
  • On November 20, 2006, a further debenture was again made and upon registration the next day, Adopt A Light secured another loan facility of Sh30 million making an aggregate of Ksh70 million.
  • Then on April 4, 2013, Passaris made a letter of guarantee and indemnity for Ksh15 million to Adopt A Light.
  • On his part, Ransley, made another letter of guarantee and indemnity for Ksh15 million on April 24, 2013.
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2 COMMENTS

  1. I thought Muthoni won a good payout – millions in KES from her former husband. Anyway I wish her good luck to able to turn around her company for her family’s sake and that of Kenya economy

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