Court returns receivers to KPCU after failed bank deal

 

KPCU headquarters in Nairobi. FILE 

By GALGALLO FAYO

In Summary

• Justice Mumbi Ngugi on Tuesday gave KCB the nod to appoint receiver managers to shepherd the coffee marketing union.

The High Court has made a U-turn and allowed Kenya Commercial Bank (KCB) to take over the management of Kenya Planters Co-operative Union (KPCU).

Justice Mumbi Ngugi on Tuesday gave the bank the nod to appoint receiver managers to shepherd the coffee marketing union.

The union had on January 10 got orders stopping the running of its affairs by managers appointed by KCB, which KPCU owes Sh680 million.

Justice Ngugi reversed the earlier High Court orders after it emerged that the KPCU’s board failed to disclose terms of a settlement deal it reneged on after agreeing with the bank.

“I believe that had full disclosure been made, the court may well not have issued the orders of January 10, 2014 which did have mandatory effect of removing receivers,” ruled the Judge.

“For the avoidance of doubt, the receivers appointed by KCB on January 9, 2014 shall manage the affairs of the petitioners pending hearing of the two applications now before court or further orders of the court,” ordered the judge.

KPCU inked a deal with KCB in November that it will pay the bank Sh100 million and settle the remaining Sh580 million within six months, leading to the lifting of the receivership on December 3. The union had been in receivership since 2009.

The farmers’ body failed to meet the settlement terms, prompting KCB to appoint fresh receiver managers in January 9. But KPCU moved to court and claimed that it was unable to pay the Sh100 million on the failure by the bank to make available land titles that could have secured money from a financier.

READ: KPCU title deeds missing in Sh700m dispute with bank

KPCU told court it was to pay Sh100 million to KCB within 30 days, claiming that the bank declined to provide the titles to secure the money from a financier.

But KCB’s lawyer Kamau Karori said the release of the titles was not part of the settlement agreement.

Title deeds

“In the event of default in paying any of the agreed instalments, the respondent (KCB) would be at liberty to appoint receivers and/or sell Wakulima property as the case may be,” said Karori.

KPCU had alleged in court documents that title deeds for its properties worth more than Sh2 billion that are alleged to be in KCB’s custody cannot be traced, which could put the investment of 700,000 coffee farmers countrywide at risk.

KCB accused the union of rushing to court before the avenues that provided for arbitration are exhausted, terming the suit premature.