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Creditor seeks to kick out Mumias Sugar controller

By Kamau Muthoni | Feb 4th 2022 | 2 min read
By Kamau Muthoni | February 4th 2022


Mumias Sugar Company gates [Benjamin Sakwa, Standard]

The battle over control of Mumias Sugar Company has taken a new twist after a law firm asked the court to kick out the administrator Ponangipalli Venkata Ramana Rao.

M/S Kimeto and Associates Advocates in its application before commercial court judge Alfred Mabeya claims that Rao is not taking care of the creditor’s interest as had been directed by the court.

Mumias owes the law firm headed by Jackline Kimeto Sh76 million.

Kimeto claimed that the current lease wars are a precursor of Rao’s failure to follow the law.

“Despite various requests by the applicant from the date of his appointment by this court, the second respondent (Rao) as the administrator has since failed and or refused to operationalise the administration process in accordance with the Act as well as the directions of this court,” she argued.

At the same time, she noted that from statements filed by Rao in court in January this year, Mumias generated more Sh1.4 billion between June 29, 2020 and November 12 last year.

Rao in his affidavit revealed that Mumias payments from September 20, 2019 and May 31, 2020 was Sh283 million while between October 1, 2020 and September 30, 2021, payments were Sh803 million.

He said that KCB, ABSA and Stanbic Bank, Ecobank and PROPARCO are the secured creditors.

According to him, PROPARCO and Ecobank assigned their debt to Vitoria Commercial Bank and had sought to have their own receiver-manager. The court however blocked them on January 12 this year.

Rao argues that following court orders in November last year, he concluded evaluating the lease bids and awarded Uganda miller, Sarrai Group the tender.

“As I have stated in previous affidavits filed herein, the leasing process is the only viable option to undertake the revival efforts of the company,” he stated adding that the freeze orders will delay the entire administration process.

On the other hand, Kimeto claims the money was more than enough to offset Kenya Commercial Bank’s debt.

She now wants the court to appoint another administrator and order that a new lease tender be published.

M/S Kimeto and Associates had in 2019 asked the court to liquidate the ailing miller over a debt it accrued after representation in court cases.

The law firm in its insolvency papers argued that Mumias had failed to honour its end of bargain even after it was represented in court in several cases since 2015.

“In spite to various verbal commitments to pay by the board of directors and management of the company, the said board of management seem to be unable to turn around the affairs of the company to meet its obligations to its creditors as well as properly account for the proceeds from the operations of he company thereby piling more debts over existing debts,” the case filed before Milimani Commercial Court read in part.

The case will be mentioned today.

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