THE HIGH court has thwarted attempts by I&M Bank to auction property belonging to a director of a plastic bags company, Hi-Plast, in a case involving the disputed recovery of a Ksh300 million loan.
Hi-Plast, already placed under administration, through its lawyer Eddy Orinda obtained an order barring I&M and its agents from selling the property in an application that also cites the bank for contempt as it emerged that the property was advertised for sale contrary to a court ruling and “in blatant disregard to the conditions and objectives of administration.”
The company has been contesting the amount demanded by the bank, placing it under a spotlight of an interest overcharge of Ksh53 million against normal rates.
“Contrary to the ruling and order of the Court, which expressly and unambiguously deterred it from selling the suit property, the Secured Creditor has unlawfully proceeded to advertise LR.NO. 1870/X11159(I.R.No.57684) for purported sale on August 20 2019,” court filings by Hi-Plast lawyer, Orinda, read.
It continues: The Secured Creditor having blatantly disregarded the conditions and objectives of administration and the tenor and extent of reliefs granted to it in the ruling, is unlawfully intent on disposing of the suit property which is a personal guarantee to the principal loan.
The court heard that Hi-Plast was in good books with its creditors until sometime in 2017 when the government imposed a ban on the manufacture of plastic bags, hence stalling the petitioners business.
“Consequently, the petitioner was unable to meet its financial obligations, thus necessitating it to seek to be placed under administration,” Orinda states in an application certified urgent and that has been slotted for hearing during the Vacation.
The ruling on July 31 2019 placed Hi-Plast under administration and appointed the Official receiver as the administrator.
Colour of right
It was held further that if sold, a separate property, L.R No.209/8611/2 would settle all liabilities and the court allowed I&M to exercise its statutory power of sale over the property to only recover the principal sum of ksh300 million pending determination by the administrator of the interest due.
“The Secured Creditor has no colour of right to interfere with or dispose of the suit property,” an affidavit sworn by the firms director Mahesh Dhodhia reads.
The case will be mentioned on September 7 2019 for further directions.