The High Court has granted Kenya Commercial Bank (KCB) the green light to auction residential properties owned by Nairobi-based firm Meru Woods Industries, following a default on a loan that escalated to Sh446 million.
In a ruling delivered this week, Justice Fred Mugambi found that Meru Woods Industries had failed to meet its repayment obligations.
The company had initially secured a loan of Sh112.5 million, which ballooned to Sh158 million by mid-2024 and later soared to Sh446 million due to accumulated interest and penalties. The Lavington properties had been used as collateral for the facility.
During a February hearing, Meru Woods Industries claimed KCB had improperly consolidated its loan with that of another borrower and alleged that it was not served with the mandatory 90-day statutory notice.
However, the court dismissed these arguments, with Justice Mugambi ruling that the firm had not established a prima facie case and that the balance of convenience favoured KCB’s right to realise its security.
KCB presented documents proving that all required notices under the Land Act—a 90-day demand notice, a 40-day auction notice, and a 45-day redemption notice—had been duly issued.
The bank also submitted a formal valuation of the Lavington properties to justify enforcement.
The decision aligns with similar rulings in recent months. In April, the Court of Appeal lifted an injunction against KCB, allowing it to auction 100 homes in the Greatwall Gardens estate in Athi River over a Sh1.9 billion loan default.
KCB has increasingly turned to court-sanctioned asset auctions to recover debts, including the planned sale of land in Mavoko owned by East Africa Portland Cement Company to retire a Sh6.8 billion loan.
This ruling underscores the judiciary’s growing support for banks enforcing collateral claims in response to Kenya’s mounting non-performing loan crisis, which had risen to Sh598.5 billion by the end of 2024.
Written By Ian Maleve
