Auctioneers stormed Mumias Sugar Company to recover Sh13.4 million owed to a former employee.
Pamela Lutta had sued the miller for wrongful termination.
The development is set to deepen the firm’s financial woes and make it impossible for it to resume operations as earlier expected.
The management had earlier received a letter demanding repayment of huge debts in full.
The order by the Labour and Relations Court on January 22 gave the auctioneers the green light to confiscate and sell the company property to recover Ms Lutta’s money.
Share of problems
But police in Mumias declined to execute the order, saying its authenticity could not be verified since it did not bear a court stamp.
On August 23, Maywood Auctioneers presented to the company a list of nine vehicles valued at Sh3.1 million that they intended to posses. The valuation has, however, been challenged by the management.
Acting CEO Patrick Chebosi yesterday said it was unfortunate that the company had reached a point where creditors wanted property auctioned to get their money.
One of the vehicles listed for auctioning is the CEO’s.
Mr Chebosi appealed to institutions and individuals it owes money to be patient.
“The only way we can pay debts is if we are allowed to crush sugarcane and start milling again,” said Mr Chebosi.
The company was scheduled to restart milling last week, but cane transporters demanded pay before they could have a contract with the miller.
“The company has its share of problems, but if we are allowed to focus on restarting operations, I’m sure with time all debts will be paid,” said Chebosi.
The miller has accumulated more than Sh20 billion in debt, owed to financial institutions, farmers and contractors.
Mumias Sugar also owes the Kenya Revenue Authority more than a Sh1 billion in unpaid taxes and accrued interest. Farmers are owed more than Sh700 million in payments for sugarcane delivered over the years.
Other institutions the miller owes money include the Kenya Power, who last month temporarily disconnected electricity to the factory.
The Government has already pumped Sh3.7 billion in bailout cash from the Treasury. Talks are ongoing between the company and the Government for a further Sh3 billion bailout.