Owners of English Point Marina have been blocked from accessing 15 bank accounts, pending the hearing of an application filed by KCB Group.
Justice Dora Chekwony barred the directors of Pearl Beach Hotels, which owns the luxury hotel on the Kenyan coast, from accessing the bank accounts at DTB Bank, days after the court stopped KCB’s appointed receiver-manager from taking over the troubled real estate firm for defaulting on loan repayment.
KCB had earlier seized the hotel, accusing the owners of the real estate firm of defaulting on Sh4.8 billion loan.
“In order to balance the Bank’s right to recover the facility with the interest to maintain the Respondent as a going concern, I exercise this court’s discretion to grant the following orders,” the judge said.
The court documents did not reveal how much is in the 15 bank accounts.
The judge clarified that the orders of status quo, stopping the receiver, which she issued last week, were not meant to defeat the bank’s right to protect its interest.
She said the directive was meant to preserve the property, pending the determination of the contention as to whether there was a default as claimed by KCB.
The judge said the lender can still apply to set aside or review the order. The court directed the case to be heard on June 13.
KCB Group has only placed English Point under receivership, but the lender could go after the directors’ personal property if they do not realize their loan.
Court papers show that the directors, including Nazir Mohamed, Nafisa Kanji, Alnoor Kanji, Leila Kanji and Amyn Kanji had given personal guarantees to secure the loan.
Last week, the owners obtained orders blocking KCB’s appointed receiver-manager, Kamal Anatroy Bhatt, from taking over the luxurious hotel, pending the determination of the case filed by the real estate firm.
The directors argue that KCB has overcharged them by more than Sh893 million on loans advanced to the firm and hurriedly taken over the establishment for defaulting in repayment.
Pearl Beach Hotels said that it has been engaging the lender to address the loan repayment and that KCB admitted an overcharge of Sh893.7 million in its books.
They claim that the receiver manager moved in immediately and allegedly blocked the directors from accessing the building where they reside with their families.
The court also heard that the real estate developers have been engaging the lender to settle the overcharge.
“The applicant and the 1st respondent have been engaging amicably on how best to address the overcharge and the most strategic manner of disposing of the business as a going concern given the depressed market during the Covid-19 pandemic and the slow return to normalcy,” lawyer Nick Ndeda said in the application.
Mr Jinnah says in an affidavit that the firm borrowed loans of up to Sh4.8 billion on diverse dates between 2011 and 2018.
“The 1st defendant’s conduct has been unconscionable in that they have been in long negotiations over the exact outstanding amount if any, and at all times the 1st respondent caused the applicant to believe, on which belief they placed reliance, that they would come to an understanding only for the defendant to irregularly appoint a receiver,” Mr Ndeda said.
He says that the firm has paid Sh3.35 billion and receives revenue from the building to service the loan.
According to Mr Jinnah, the appointment of the receiver was made without notice and justification as it places the risk on the assets the bank purports to protect and will doubtlessly only result in wasting away the facility and the value of the unsold units.
He says the firm is a specialized luxury hotel offering five-star services and has developed and curated unique tradecraft for that purpose and benefits from the individualized historical memory of its directors.
He further says the directors, including himself, and Alnoor Kanji as well as their families permanently reside in penthouses within the building but were denied access by the receiver.
“That the 2nd respondent had evicted the directors of the applicant from the residential homes which are located on the premises rendering them destitute and denying them their fundamental rights as protected in the Constitution,” he said.
The firm also sought to bar KCB from selling or subdividing any of the property or any part of the building or development and its assets, pending the determination of the application.
Pearl Beach Hotels has been struggling to meet its obligations to the bank over the years and the lender took over English Point Marina came after failed attempts to restructure the loan but the owners were still unable to meet the payments.
The luxury property is located by the harbour and consists of 96 apartments, eight penthouses and a 26-room hotel.
It is one of the few private projects granted the Vision 2030 Private Sector Flagship status.
The property has been sold to several people and those who have purchased units will not be affected by the KCB takeover.
Courtesy of Sam Kiplagat