Sh643m debt led bank to act against KPCU

 By Nancy Akinyi

A commercial institution says it placed Kenya Planters Co-operative Union (KPCU) under receivership because the company was unable to pay more than Sh643 million it owed.

Kenya Commercial Bank (KCB) says its effort to offset the loan account through other means were futile because KPCU loan account constantly lacked funds.

KPCU is challenging the bank’s move to place it under receivership on October 19.

It wants the court to issue an injunction restraining KCB’s appointed receiver managers from taking over the union’s duties.

The bank through its Relationships Manager Jacob Unda says it is also in business and debts accruing to millions of shillings should not be taken lightly because they would plunge the bank into financial crisis.

Mr Unda says in an affidavit although KPCU states it has an asset base of Sh3.5 billion, the same is not the true reflection of the current position.

Loan account

KCB says granting an order of injunction restraining its appointed receivers from taking over their responsibilities would compromise the bank’s ability to recover the said debt.

Unda says the measure was taken because KPCU failed to acknowledge receipt of the notice demanding it settles its loan account.

The receiver managers are Mr Harveen Gadhoka and Mr Daniel Mutisya.

Embattled KPCU told Commercial Court Judge Muga Apondi that placing it under receivership would lead to a mass exodus of farmers to other millers and marketing agents, which would cause it severe hardship.

It is accusing the bank of taking drastic measures in a bid to recover a disputed loan including freezing an important account where coffee proceeds are banked.

The union wants the court to declare appointment of receiver managers invalid and ineffective and a further order restraining the bank from interfering with its accounts.