The move by Kenya Commercial Bank (KCB) to auction a prime property belonging to the former Nakumatt C.E.O Atul Shah, has resulted into a fight that has dragged in three other banks claiming the same property.
Mr Shah has accused KCB of mischief, arguing that the Sh2 billion asset is also charged to Bank of Africa, DTB Bank and Standard Chartered Bank.
He said KCB has breached a consent deal agreed among lenders that auction should wait for the ruling in the Court of Appeal, where Bank of Africa is pushing to sell the same property.
Mr Shah argued through his company, Collogne Investments.
In August, Bank of Africa was given go ahead by the court to auction Mr Shah’s personal property over loans offered to the collapsed Nakumatt, but he blocked the sale through a court order.
But KCB claims that it is not a party to the suit in the Court of Appeal suit therefore it can not block it from selling the land.
The collapsed retailer owes Stanchart and terror linked DTB Bank a combined Sh4.5 billion with court documents showing that the two banks are also targeting a Sh2 billion property.
Mr Shah used Collogne Investments, which owns the Sh2 billion property in Nairobi, as Nakumatt’s guarantor in part of the multiple loans.
But he claims that the value of the property is far much higher than the loan demanded by KCB, which he says was capped at Sh500 million.
“The subject security is immovable property and the applicant cannot spirit the same away neither is its value likely to diminish in a manner that would expose the respondent,” Collogne argued when it sought to stop the sale.
KCB has says the company cannot stop auction because it has not met the threshold for the court to stop the sale.
The loans were extended after a formal application, a letter of offer being made and security advanced in support.
“In any event, the applicant has not even paid the amounts it concedes as due and owing, and in the circumstances, I verily believe that this court should dismiss the application with costs,” Francis Kiranga said in an affidavit.
Mr. Kiranga is KCB’s lawyer.
Nakumatt shut completely in January with Sh30 billion in debts including Sh18 billion to suppliers, Sh4 billion to commercial paper holders and other banks that are now pursuing their unpaid loans.
The fallen retailed owed DTB Bank Sh3.6 billion, Standard Chartered Sh900 million, KCB Sh1.9 billion, Bank of Africa Sh328 million, UBA Sh126 million and GT Bank Sh104 million.
Court papers show that Mr Shah said that some lenders were reluctant to support Nakumatt’s rescue bid but only gave loans with their eyes on his property.