Monday, March 19, 2018

Karuturi gets second chance against Stanbic hammer

A greenhouse at Karuturi farm in Naivasha. file PHOTO | NMG A greenhouse at Karuturi farm in Naivasha. file PHOTO | NMG 

GALGALLO FAYO

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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