I&M Bank has suffered a blow after the High Court blocked it from appointing administrators to manage the 14 Riverside complex where the Dusit D2 hotel is located.
High Court judge Josephine Mong’are further revoked the appointment of PVR Rao and Swaroop Rao as joint administrators of Cape Holdings Limited.
The administrators had rushed to court to block Synergy Industrial Credit Ltd from selling the property, arguing that the administration was set to expire in March 2025 and the court’s permission would be required to sell the property to settle all lawful debts.
Justice Mong’are discharged the administration saying the proceedings reinforce the position that Cape Holdings was using administration proceedings under the Insolvency Act to evade satisfying the decree held by Synergy.
“As such, the Administration proceedings against Cape Holdings cannot proceed as the present proceedings are an abuse of the court process and also in light of the Court of Appeal’s findings that I&M Bank has no legal interest in the suit property, over which the impugned debenture was created,” said the judge.
The judge said the application was a classic case of abuse of the court process, which the court could not countenance.
Through senior counsel Allen Gichuhi, Cape Holdings had also sought to admit the administrator’s report and minutes of the creditor’s meeting and the permission of the court to sell the property and come up with proposals to all creditors, for the settlement of all lawful debts and mediation if Synergy declines the settlement offer.
This is the second loss to Cape Holdings after Justice Mong’are declined an application last month to review an award given to Synergy in 2015, after a botched sale deal.
The Sh1.6 billion award has since ballooned to Sh5.5 billion and Cape Holdings wanted the High Court to review the award and interest given to Synergy Credit by an arbitrator in 2015.
In yet another loss for Cape Holdings, Justice Mong’are blocked the firm from interfering, transferring, or dealing with several properties in Kajiado, which were developed while the case was ongoing.
In the latest decision, Justice Mong’are said another judge had expressed doubts and questioned the circumstances under which the security for a loan of Sh2.82 billion on December 15, 2020, was created.
She said Justice Alfred Mabeya held that the timing of the administration under the said debenture was not meant for the purpose known under the Insolvency Act but was meant to buy a moratorium for Cape Holdings to enable it to evade its legal obligations under a lawful decree.
Synergy Industrial Credit through senior counsel Ahmednasir Abdullahi had applied for the court to lift the administration.
“I am in agreement with Synergy that the placement of Cape Holdings under administration is prejudicial to the former’s rights and interest and is a fetter to Synergy to fully execute and obtain benefit from the lawful decree it holds,” said the judge.
