NCBA sues Hillcrest and Gems over Sh1.6b loan

NCBA logo. [Elvis Ogina, Standard]

Proprietors of international school Hillcrest and Gems have been sued over Sh1.6 billion loan from NCBA Bank.

The lender in its case filed before the commercial court in Nairobi says the proprietors have not been honoring their end of the bargain.

NCBA says the property used to secure the loan cannot cover the amount of money loaned if it is auctioned. The bank has sued Hill Holdings Limited, Hillcrest Investments Limited, and Gems National Academy Limited which trades as Regis School in Runda, Gems Holdings Africa Limited, Gems Global Schools Limited, Varkey Group Limited, Gems Africa Limited and Ernestem Holding Limited.

In its case, the firm alleges that Hillcrest’s parent company, Varkey, is incorporated in the British Virgin Islands.

According to the bank, the firm has failed to service the loan initially given. It claims the loan was Sh1.36 billion and has grown to Sh1.65 billion. NCBA says it advanced Hill Holdings Limited the money. It had been guaranteed by Gems Holdings Africa, Gems Global and Varkey. GEMS Holding was incorporated in the United Arab Emirates while Gems Global is incorporated in the Cayman Islands.

The court heard that Hillcrest Investments agreed to be an additional guarantor for a sum not exceeding Sh160 million. “The first defendant (Hill Holding) has since defaulted in payment of the amount advanced under the advanced facility,” said NCBA in its case filed before Justice Chacha Mwita.

NCBA issue its first demand letter in March. However, neither the debtor nor the guarantors arranged to settle the debt. 

“The debt owed by the defendants is not disputed and the plaintiff is likely to succeed in this suit,” said NCBA’s legal officer Stephen Atenya. According to Atenya, NCBA loaned Hillcrest depositors money.

He said: “The actions of the defendants have affected the plaintiff’s operations as the money issued to the defendants belongs to the bank’s depositors and not the bank. Additionally, the bank continues to suffer loss.”

NCBA said on October 15, 2021, Gem National and Gem Africa struck a share transfer deal with Ernestem Holding against their agreement on the loan.  

The bank wants the court to bar Hillcrest owners from selling their shares in any of their companies. It is asking the court to compel the firms to pay Sh1.65 billion and interests accrued. NCBA also wants the court to force Gems Africa, Gems National and Ernestem Holding to lift their veil for investigations on the transfer of 700 shares.