Bankers risk being jailed for contempt over Sh5.2bn loan

English Point Marina. [Denis Kibuchi, Standard]

Senior managers at KCB Bank risk being sentenced to jail for seizing a beach hotel in Mombasa over a Sh5.2 billion debt despite a court order stopping the takeover.

English Point Marina wants the Court of Appeal to take action against KCB Bank for taking over the hotel and putting it under receivership despite a court order.

The court had stopped the bank from appointing Kamal Bhatt as receiver manager.

Through lawyer Nick Ndeda, the hotel’s management claimed that the bank proceeded to assume receivership role of the property in disregard of the huge investment they have put in place and frustrating all their efforts to have the loan settled.

“They have unlawfully and illegally continued to disobey the court orders while exposing the hotel owners to untold and irreparable harm.

The hotel continues to incur financial loss and damage to its reputation from the illegal actions,” said their lawyer Ndeda.

He asked the court to summon KCB Bank directors and the receiver manager to show cause why they should not be sentenced to jail for disobeying a court order.

He also wants the court to compel KCB to recall the receiver manager and return the hotel’s management to the owners pending determination of the application.

According to the lawyer, KCB Bank misinterpreted a Court of Appeal order that suspended the hearing of the dispute at the High Court and  appointed Bhatt to manage the hotel.

“The Court of Appeal did not overturn the order stopping the bank from taking over the hotel. The court only suspended the hearing of the dispute at the High Court but directed that the status quo be maintained,” said Ndeda.

The dispute started in June when KCB Bank seized the English Point Marina and placed its parent company, Pearl Beach Hotels, under statutory management over the Sh5.2 billion debt.

The bank then appointed Bhatt as the administrator and receiver manager to sell the property in order to recover the loan amount.

But the hotel filed an application before the High Court where Lady Justice Dorah Chepkwony stopped the bank’s move and suspended its decision to appoint Mr Bhatt as receiver manager.

The hotel argued that the bank seized the property without following due process by miscalculating the amount due to it from the initial loan of Sh4.8 billion which had been substantially repaid.

According to the lawyer, the hotel’s management had already made a proposal to the bank on how to settle the remaining balance but the bank illegally seized the property without giving the owners a chance to settle the dispute.