On Monday, KCB Group petitioned the Court of Appeal to stay a decision that kicked out its receiver manager PVR Rao as administrator of Mumias Sugar Company.
The lender, represented by senior counsel Kiragu Kimani, told a three-judge panel that it would be unfair for another administrator to preside over the ailing miller’s assets despite the fact that it was a secured creditor.
Mr Kimani told Justices Asike Makhandia, Sankale ole Kantai, and Jamila Mohammed that if the order is not suspended, the appeal will be rendered ineffective.
“The appeal raises weighty issues, which should be considered by this court,” he said.
Sarrai Group of Uganda and Gakuamba Farmers Cooperative Society supported the application, claiming that the Uganda-based company had already contracted farmers for sugarcane farming and that they would have no recourse if the decision was not suspended.
The judges suspended the High Court decision pending ruling on September 23.
The appeal was opposed by West Kenya through senior counsel Paul Muite, Kimeto & Associates and Dubai Based Vartox Resources Inc.
In March, the High Court removed Mr Rao as Mumias’ administrator for favoring KCB over other creditors.
Kereto Marima was then appointed in his place by Justice Alfred Mabeya. The court later granted Sarrai Group a temporary order to remain at Mumias while the firm files an appeal.
The company claimed that if the lease is not renewed, it will incur a loss of Sh5.6 billion in investment.
KCB Group placed the miller under receivership in 2019 due to an unpaid loan of Sh545 million and appointed Mr Rao as receiver manager. The court later appointed him as administrator and directed him to complete the leasing process and report progress to the creditors.
On December 22, Sarrai announced the successful bidder after the bids were opened. On December 24, the Uganda-based company moved into the premises and immediately began tilling the land, paving roads, and repairing the factory.
Other bidders objected to the lease because it was kept secret. Justice Mabeya later cancelled the lease, claiming that it was not in Mumias’ best interests.
