PrideInn Hotels in court bid to temporarily stop pay demands on Sh90m debt

Security guards outside PrideInn Paradise Beach Resort Convention Centre and Spa at Shanzu in Mombasa, January 28, 2017. FILE PHOTO | NMG 

By PHILIP MUYANGA

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Summary

• PrideInn argues that the demand by Tropicana Hotels Ltd is illegal and contemptuous, noting that the liquidation order has been suspended.
• It says that by calling up the guarantee, Tropicana Hotels is denying it the right to pay the decreed amount and evade liquidation as ordered by the Court of Appeal.

PrideInn hotel chain has moved to court seeking a temporary injunction restraining Tropicana Hotels Ltd from calling up for payment or enforcing a bank guarantee for Sh90 million.

The chain, which last week lost an appeal against liquidation, is seeking the order pending hearing and determination of its application.

PrideInn Hotels and Investments Ltd had been put on liquidation and subsequently put under receivership by Justice Patrick Otieno for failing to pay Sh69.3 million debt.

Justice Otieno had allowed the winding up petition filed by Tropicana Hotels Ltd, saying the debt was not genuinely disputed.

PrideInn unsuccessfully appealed the decision at the Court of Appeal.

The court, however, suspended the order of liquidation for 30 days to enable PrideInn pay all the monies due, failure to which the orders would remain in effect.

PrideInn said despite the 30-day suspension of the liquidation order, Tropicana Hotels, through its lawyer in a letter dated March 22, demanded payment of Sh90 million under the guarantee issued by a bank to be paid on or before March 29.

'Illegal and contemptuous'

PrideInn argues that the demand by Tropicana Hotels Ltd is illegal and contemptuous, noting that the liquidation order has been suspended.

“The petitioner herein calling up the guarantee is purporting to recover what was given through the liquidation order which has been suspended,” the application by PrideInn reads in part.

PrideInn further argues that by calling up the guarantee, Tropicana Hotels is denying it the right to pay the decreed amount and evade liquidation as ordered by the Court of Appeal.

It also argues that the High Court never awarded the petitioner any interest on Sh69.3 million that the official receiver was to recover through the liquidation order.