A greenhouse at Karuturi farm in Naivasha when the flower farm flourished. Macharia Mwangi | Nation Media Group
Karuturi fails in bid to stop piecemeal sale of its assets
By Joseph Wangui
Court Reporter
Nation Media Group
Stanbic Bank has received the nod to proceed with a piecemeal auction of assets of one of Kenya’s largest flower farms, Karuturi Limited to recover a Sh1.6 billion debt.
Justice David Majanja allowed the sale to proceed after declining the firm’s request to direct the lender and receiver managers to undertake the sale of Karuturi’s six land parcels together with other assets as a whole by way of private treaty.
The judge allowed the bank to sell the farm’s suit properties piecemeal saying if there will be any damage, the same can be remedied through compensation. Targeted lands are registered in the name of Surya Holdings Limited and Rhea Holdings Limited. The suit properties were used to secure loans amounting to US Dollars 6,590,000 advanced by the bank to Karuturi.
Due to default, Karuturi was placed under receivership on February 10, 2014. To forestall the receivership and sale of the suit assets, Karuturi filed a suit in court and applied for an injunction restraining the auction.
However, it eventually lost the battle last year after the Court of Appeal dismissed the appeal against refusal by High Court to grant an injunction on the intended sale.
The Supreme Court also rejected Karuturi’s bid to pursue the matter further. An audit of the receivership done to establish any further amount due and owing by Karuturi established that Karuturi owed the bank a sum of $4,028,194 and Sh2,706,994 together with contractual interest as contained in the loan agreement.
The court had also ordered Surya and Rhea to pay the bank US Dollars 6,337,120 being the sums outstanding to creditors and US Dollars 6,734,083 being monies advanced by the bank post the receivership period up to December 31, 2016. They were also ordered to pay US Dollars 978,849 expenses incurred by the bank in preserving the assets of the company from January 1, 2017, to July 31, 2017.
But jointly with the flower farm and the director of the Karuturi Group, Sai Ramakrishna Karuturi, they returned to court after the bank advertised for the sale of the assets in July 2021. The director is also the major shareholder of the group.
In asking for the sale of the assets as one whole by way of private treaty, Karuturi argued that they had obtained credible information that the bank and the receiver managers had resorted to seeking to subdivide the land and selling it in small lots.
But Justice Majanja noted that the bank’s power of sale is now beyond dispute after the Court of Appeal dismissed the appeal against the refusal by High Court to grant an injunction on the intended sale. The Supreme Court also rejected Karuturi’s attempt to pursue the matter further.
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Stanbic Bank to auction Karuturi assets to recover Ksh1.6 billion
In 2021, the Supreme Court also rejected Karuturi’s further bid to pursue the matter.
by Muindi
The Portfolio Guarantee Facility of Ksh 1 Billion will allow Stanbic Bank Kenya expand their lending capacity and coverage to SMEs.
Stanbic Bank Kenya will auction some assets belonging to the Naivasha-based Karuturi flower farm to recover loan dues of over Ksh1.6 billion.
High Court Justice David Majanja allowed the sale to proceed after declining Karuturi’s request to direct the lender and receiver managers to sell its six land parcels and other assets through a private treaty.
Nation Africa reports that the targeted lands are registered in the names of Surya Holdings Limited and Rhea Holdings Limited.
In 2021, the Supreme Court also rejected Karuturi’s further bid to pursue the matter.
In December 2010, Karuturi Limited had secured lending from Stanbic Bank Kenya Limited amounting to KSh227 million and further lending of US$3,855,060 about two years later in January 2013.
The debt was contested by the shareholders in the High Court, which in January 2018 granted a go-ahead for the bank to sell the company’s assets in the event its directors defaulted on making payment in respect of the amounts set out in an order within the prescribed periods.
