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Poles supplier fails to block asset auction in Sh113m KCB debt row
The bank provided evidence that it had issued the necessary notices, including the 90-day statutory notice, a 40-day notification of sale, and a 45-day redemption notice.
A wooden poles supply firm stands to lose a prime property in Lavington, Nairobi, after the High Court rejected its application that sought to bar the sale of the assets over a Sh112.5 million loan by KCB Bank.
High Court Judge Freda Mugambi said Meru Woods Industries failed to provide a convincing reason to block the bank from selling a house the company owns within Lavington to recover its money.
“I believe it is now obvious that the applicants have not made out a prima facie case with a probability of success,” the judge said in a February 27, 2025 decision.
“The balance of convenience also tilts in favour of the bank realising their security as early as possible so that the value of the suit property is not outstripped by the ballooning debt.”
Meru Wood Industries took a loan facility of Sh112,500,000 from KCB Bank for asset financing. To secure the loan, the company gave a house in Lavington as collateral.
The company defaulted on its loan repayment obligations, leading KCB Bank to issue a recovery notice and begin the process of selling the property to recover the outstanding debt, which had risen to Sh158 million as of July 15, 2024.
Meru Wood told the court that KCB Bank had merged their loan facility with that of a different entity, Meru Highlands Dairy Ltd, an act they claimed was illegal. They further alleged that they were never served with the mandatory 90-day statutory notice as required under the Land Act, making the planned auction of their property illegal.
However, the lender maintained that the applicants had defaulted on their loan obligations.
Refuted claims
The bank provided evidence that it had issued the necessary notices, including the 90-day statutory notice, a 40-day notification of sale, and a 45-day redemption notice. KCB also refuted claims of consolidating separate loan accounts, arguing that each company’s financial records were maintained independently.
After reviewing the submissions, Justice Mugambi found that the applicants had not established an arguable case showing that they would suffer irreparable harm and that the balance of convenience tilts in their favour.
The court noted that bank records confirmed the outstanding loan amount and that the statutory notices were duly served through registered post and personal delivery by the law.
Justice Mugambi added that the valuation report presented by the bank disproved Meru Wood’s claim that no proper assessment of the property had been conducted.
She said, “The valuation report found on pages 235–253 serves as evidence that a valuation was indeed conducted on the suit property. The report, dated September 20, 2023, further disproves the claim that no such valuation took place.”
