Kenya Commercial Bank (KCB) has secured judicial approval from the High Court to proceed with the sale of two residential properties in Lavington belonging to Meru Wood Industries Ltd and its directors, after the company defaulted on a loan that ballooned to Ksh 446 million.
The loan originally amounting to Ksh 112.5 million was extended for asset financing but remained unpaid despite accommodations, increasing to Ksh 158 million by mid-2024; compounded interest and penalties escalated the debt further to Ksh 446 million.
Meru Wood contested the enforcement, alleging that KCB had improperly merged its debt with that of another entity, failed to serve the mandatory statutory notices, and lacked proper valuation documentation.
In a thorough examination, Justice Fred Mugambi dismissed these claims, affirming that KCB had properly maintained separate accounts, served a 90-day demand notice in May 2023, a 40-day auction notice, and a 45-day redemption notice, and conducted a formal property valuation in September 2023.
Addressing the legal criteria for granting injunctions, the judge concluded that Meru Wood had not presented a prima facie case nor demonstrated irreparable harm, and emphasized that the balance of convenience favored the bank to preserve the collateral’s value.
With injunctions denied, KCB is now entitled to publicly auction the Lavington homes, marking a decisive win in its bid to recover outstanding dues.
This case aligns with KCB’s growing trend of aggressively tackling non-performing loans mirrored in earlier enforcement actions involving other high-value debts.
The bank’s action sends a strong signal to the corporate sector: adherence to loan terms and timely repayments are critical.
Borrowers are reminded that statutory notices cannot be overlooked, and legal clarity around collateral enforcement is increasingly upheld.
Meru Wood still retains the right to appeal, but unless it settles the debt, it risks losing the properties.
This ruling reinforces judicial support for lenders enforcing collateral under Kenyan law.
As KCB and other banks intensify recovery efforts, Nairobi’s luxury property market may face an uptick in forced sales, with broader ramifications for real estate values and credit discipline.
Written By Ian Maleve
