A greenhouse at Karuturi farm in Naivasha. file PHOTO | NMG
Summary
- Move gives the flower farm owners a second chance to fight for their company.
- The High Court in early March gave the lender the greenlight to auction the firm's assets should its owners fail to settle the colossal debt within 90 days.
- Karuturi Ltd, one of the world’s top growers of roses and exporting more than one million stems annually, was put under receivership in 2014 after failing to service a Sh383 million loan borrowed from CfC Stanbic.
The owners of flower farm Karuturi Limited have asked the court
to grant them leave to move to the Court of Appeal as they fight to save
a prized asset from being auctioned by lender CfC Stanbic
over a Sh1.8 billion loan default.
The
High Court in early March gave the lender the greenlight to auction the
firm's assets should its owners fail to settle the colossal debt within
90 days.
Justice Francis Tuiyott has given Karuturi
leave to appeal against his decision, giving them a second chance to
fight for their flower farm.
“In order to lodge or
proceed with the application for amendment of the plaintiff or appeal
against the decision rendered on January 19, the…plaintiffs require
leave of this honourable court in compliance with section 228 of
companies Act,” says the owners in their application filed at the High
Court.
The judge had in his ruling observed that the owners - Surya
Holdings Limited and RHEA Holdings Limited - have admitted the
pre-receivership debt and the post-receiver debt has been assessed by
audit firm selected by the owners themselves.
The judge directed the firm to settle Sh410 million pre-receivership loan in 60 days.
He
further directed the owners to settle Sh640 million the company owes
creditors other than the bank and Sh680 million advanced to the firm by
the bank after it was placed under receivership.
Karuturi
Ltd, one of the world’s top growers of roses and exporting more than
one million stems annually, was put under receivership in 2014 after
failing to service a Sh383 million loan borrowed from CfC Stanbic.
Court
records show that the bank and the owners had settled on Deloitte
Consulting Limited to undertake the audit on the firm, with a view to
establishing the amount owed to the bank during receivership.
The
audit revealed that the flower firm has sunk further debt since it was
placed under receivership. The owners objected to being held liable for
the debts incurred during the receivership period.
They
argued that the bank manipulated trade deficits of the company and that
the facilities advanced to the firm should not be borne by them.
The bank held that the owners should also bear the debt that was accumulated during receivership.
But
in his ruling, the judge observed that the audit firm was selected by
both parties in the case and that the audit report did not find the
receiver managers misconducted themselves.
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