Companies linked to Nakumatt in dispute with Stanchart over Sh950m loan

 

Nakumatt Investments Limited and Creative Enterprises Limited claim the bank is seeking to sell five properties they offered as security for a loan taken by Nakumatt Holdings. [File, Standard]

Two companies linked to former retailer Nakumatt are embroiled in a dispute with Standard Chartered Bank over a loan that has grown to about Sh950 million.

Nakumatt Investments Limited (NIL) and Creative Enterprises Limited (CEL) claim the bank is seeking to sell five properties they had offered as security for a loan taken by Nakumatt Holdings Limited, the former owner of Nakumatt Supermarket.

The companies claim the bank is demanding Sh950 million, in addition to another Sh967 million.

They argue that the original loan they guaranteed was Sh119 million. According to the companies, the bank already recovered this amount after selling a property valued at Sh1.7 billion.

The companies are now challenging the bank's plan to dispose of the five remaining properties.

The two entities say the lender, on August 20,  issued concurrent notices giving 30 days to appoint receivers under Section 92 of the Land Act and 40 days to exercise statutory power of sale under Section 96 over the same five properties.

""Those periods are presently running. Unless this honourable court intervenes at once, the Respondent may take possession and control of the Applicants' commercial properties and their income and thereafter proceed to advertise, sell and transfer them to third parties before the applicants' challenge to the debt, the notices and their service can even be heard inter partes,” their lawyer Jackson Kamenju argued.

In their case before Justice Peter Mulwa, Nakumatt Investment and Creative Enterprises claimed that they did not borrow money from the bank. Instead, they said, the burden to repay the loan was on Nakumatt Holdings.

They insisted that the security they issued to the bank did not confer responsibility on them to foot the contested loan.

“The plaintiffs averred that their liability as third-party borrower was limited to the respective principal amounts secured by their charges. The interest payable upon the banking facilities was an obligation of the borrower, who received and operated the facilities, and the Plaintiffs did not receive the advances upon which such interest accrued,” added Kamenju.

They alleged that Standard Chartered had another property registered in the name of Collogne Investments Limited and which was worth Sh1.7 billion.

The court heard that this was a first- ranking charge and had allegedly been sold to offset the loan.

According to them, the lender had allegedly admitted in a creditors’ meeting held on January 7, 2020, that Nakumatt owed it Sh903 million, inclusive of interest

“The plaintiffs therefore aver that, upon realisation of the completed Collogne property, the defendant paid itself the indebtedness due to it and was left with a substantial balance after satisfaction of its admitted debt. Having paid itself and thereafter released and discharged its substantial first-ranking security, the defendant had no lawful basis to pursue the plaintiffs' five properties for the same indebtedness,” Kamenju continued.

He stated that Nakumatt Investment and Creative Enterprises allegedly sought information on the status of the loan through Ankoor Shah, but the same has not been forthcoming.

According to him, the bank cannot go after guarantors until the status of the loan is accounted for.

He insisted that in its notices, Standard Chartered claimed that Nakumatt owed it $331,872.95 under an overdraft facility, $6.9 million under a term loan facility and Sh967 million under an import invoice finance facility.

In subsequent notices, Kamenju further claimed that the lender demanded $7.3 million together with Sh967 million against the five properties.

“The existence and amount of any residual indebtedness are matters of account. Until the defendant accounts for the borrower's payments, the Collogne realisation and all other recoveries, it cannot establish that any amount remains secured by the plaintiffs' properties. The same defect runs through all five securities. The defendant has stated the borrower's alleged global indebtedness but has not stated the amount allegedly secured, due and redeemable under each charge,” he claimed.

In an affidavit, Nakumatt Investment said it had provided four properties in Mombasa, Nakuru and Nairobi as securities, while Creative Enterprises provided one in Nairobi worth Sh26.5 million.

He further stated that Nakumatt was placed under administration on January 22, 2018. He added that the bank had allegedly not given them an account of interest and charges applied, recoveries made from the securities, the Collogne recovery and its application, or the amount, if any, which remained secured against each of the Plaintiffs' properties.

He stated that he later learnt that the bank had allegedly roped in the two companies in a separate case against National Lands Commission (NLC).

“Neither Nakumatt Investments Limited nor Creative Enterprises Limited was joined as a party to those proceedings. Neither company was served with the proceedings or allowed to be heard before the orders were obtained.”

“This surprised me because the Defendant knew how to contact the Plaintiffs and had been communicating directly with me concerning these very securities. The Defendant had acknowledged the Plaintiffs' formal communication in December 2023 and had undertaken to provide us with the requested information,” claimed Atul.

The judge directed that they should serve the court papers and appear before him on October 10.