I &M Bank has been restrained from interfering with Hi-Plast Limited suit property pending the hearing and determination of a case filed in court.
In an order issued recently, the bank has been stopped from selling or disposing of a parcel of land (L.R no 1870/X1159) that is in dispute pending the hearing and determination of an application in court.
The Bank which is a secured creditor had been authorised by the court to sell the companies (L.R NO.209/8611/2) to recover its outstanding loan of more than Sh300 million and not L.R no 1870/X1159 (I.R NO 57684).
Hi-Plast accuses the bank of acting against a court ruling and advertising its suit property which is a personal guarantee to the principal loan of Sh300 million.
“An order has been issued stopping Secured Creditor I&M Bank from dealing, trespassing or selling the suit property pending the hearing and determination of this application,” ordered deputy registrar commercial division courts.
Through lawyer Eddy Orinda, Hi-Plast moved to court seeking orders to restrain the bank from selling its disputed property saying that it is illegal under the insolvency Act.
In court documents seen by The Standard, Orinda said a July 31 ruling placed Hi-Plast under administration and appointed an official receiver as the administrator.
According to Orinda, the court allowed I&M to exercise its statutory power of sale and only sell L.R NO 209/8611/2 and not L.R no 1870/X1159(I.R NO 57684).
Court documents indicated that a charge instrument was registered in favour of the secured creditor over L.R NO.209/8611/2 as security for a loan Sh300 million.
To further secure the principal loan, Hi-Plast directors offered L.R NO 1870/X11159, registered in their names as a guarantee to the principal loan.
“Contrary to the ruling, the secured creditor proceeded to advertise the suit property for sale, which sale the bank intends to conduct on August 20, 2019,” Orinda stated in the affidavits.
The lawyer maintains the secured creditor has no right to interfere with or sell the suit property.
He says that the court order unequivocally prevents the bank from selling or interfering with the property in any manner whatsoever.
Orinda said that unless the orders sought are granted, the secured creditor will proceed to unlawfully, irregularly sell the suit property in contempt of the ruling and his client will suffer irreparable harm and damage.
In June court had barred I&M Bank from auctioning a company's property to recover an outstanding loan of more than Sh300 million, pending the determination of the actual amount owed.
In a recent ruling, Judge Margaret Muigai asked the bank to submit to the court a report on the reconciliation of Hi-Plast accounts before exercising power to auction the securities it offered.
On June 5, 2019, President Uhuru Kenyatta announced a ban on single-use plastics in beaches, national parks, forests, and conservation areas till 2020.
Hi-Plast has sued the State for Sh2 billion compensation, saying the ban has affected it.
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