NAIROBI, KENYA: Troubled Naivasha-based flower farm, Karuturi Ltd, has asked the High Court to terminate the services of receiver managers appointed in 2014 to run its operations.
In papers filed before the Milimani law court's Commercial and Admiralty Division, Karuturi claimed that the failure of CFC Stanbic to advance loan and overdraft facilities had led to the collapse of the flower firm operations in 2014.
According to documents filed in court, Karuturi said that on May 9, 2012, it entered into an agreement to receive loans and overdraft facilities amounting to $6,590,000 (Sh650 million) from the bank.
In the agreement, Karuturi secured the loans that were charged to its properties valued at $90 million (Sh9.09 billion). Karuturi claimed that the company had agreed to repay the loans through proceeds from its flower exports.
However, in 2014 Karuturi claimed CFC Stanbic recalled the credit facility after only disbursing $2.59 million (Sh261.6 million) leading to a crisis at the firm, which could not meet contractual and financial obligations. This, Karuturi says, led to suits by its suppliers and employees.
The firm claims that the bank breached the contract and acted with 'malice and in bad faith' by recalling the loan and overdraft facilities at a time when the company had committed heavy financial investments in readiness for a high crop season.
According to Karuturi, the receiver managers - Kieran Day, Ian Small, Muniu Thoithi and Kuria Mucheru - who were appointed to take over the operations of the flower farm were not qualified to run the company.
Karuturi has asked the court to declare the appointment of Kerian Day and Ian Small as receivers as unlawful and illegal.
It further wants the court to permanently restrain CFC Stanbic Bank from liquidating its assets. The firm wants the court to declare that the bank breached its contractual obligations after it declined to disburse the entire loan and overdraft facility.