•“For the avoidance of doubt, the receivership is temporarily suspended pending inter-party hearing,” he ruled.
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A commercial court has temporarily suspended a decision by Equity Bank appointing receiver managers to run the affairs of an investment firm over a disputed Sh4.8 billion loan.
Justice Alfred Mabeya certified the case filed by TransCentury PLC as urgent and further stopped Equity Bank and the two receiver managers from denying the firm directors and their authorized officials all company records, emails, all funds, all contracts and security keys pending the determination of the case.
The Judge issued the order after the firm through Nyachoti and Company Advocates told the court that the appointment of George Weru and Muniu Thoithi (Receiver managers) will cripple their operations particularly the ongoing massive projects including the ones being carried out by its subsidiaries.
Some of the projects valued at over Sh4 billion are in Kenya, Tanzania, Uganda, DRC and Zambia.
Most are at an advanced stage, and others have been finalized just pending inspection and approval.
The completion of these projects, according to the firm, will also raise additional funds towards the liquidation of the outstanding debt.
The projects vary from the supply and installation of weighbridges, renewal of expired licences, among others
The firm told the court that it has been liquidating the outstanding debt and has made all the efforts to agree on a workable program with Equity in light of the hard economic situations in the country.
"But the bank has rejected our numerous proposals without any justifiable causes and now intends to completely cripple our operations and entire business investment of many years by the said appointments," the firm said.
"As such the ripple effect and confusion in the management of the said projects will be enormous and will lead to huge financial losses to other contracted companies associated thereto compared to the debt in respect of which Equity has appointed the managers,” it added.
According to the court documents, Equity on June 16 appointed Weru and Thoithi as Receiver managers of the investment firm.
They told the court they have since forcefully entered their premises and purported to take over all operations and control effective June 16.
They argued the forceful takeover has destabilized their operations and ability to continue.
“We are in the final stages of finalizing rights issues to the tune of Sh2 billion which Equity is aware of. That capital would be sufficient to offset any outstanding debt to the bank,” it said.
The court heard that the appointment of the managers is unnecessary and that the purported debt informing the alleged appointment is disputed.
“The Bank, therefore, lacks basis to commence any form of insolvency proceedings against us,” said the firm.
They told the Judge that they have been having extensive negotiations with a view to reconciling their account and determining the actual outstanding amount.
The last time the talks were in place was on June 12. Equity sent a letter requesting more information from the firm. That is why it argues that the appointment is premature and in bad faith.
The Judge directed Equity and the receivers to respond to the matter within 14 days. Further directions will be issued on July 3.