KENYA – The Kenyan High Court has extended orders stopping sale of the assets belonging to the troubled Mumias Sugar Company by the Kenya Commercial Bank and its receiver manager.
The court said the status quo be maintained and no changes to be made in the company while it is under receivership by KCB Group over financial woes following the execution of a lender’s agreement deed dating back to September of 2010 to protect its assets and keep operations running.
The move by KCB follows approval by the court and consultations between the bank and inter-lenders who are owed an estimated sum of Ksh.6 billion (US$60m) by the down-trodden sugar miller.
KCB Group featuring as the primary lender to the struggling sugar miller sorted for Tact Consultancy Services and appointed Mr PVR Rao as the sugar company’s receiver manager to take over the day to day running of the Mumias Sugar Company.
The creditors and county government of Kakamega agreed on plans of reviving the company who resolved to appoint an administrator who would be answerable to all the parties and not just one creditor.
The sugar company has been on a run of commercial debt uptake over the past four decades from lenders including Barclays, Stanbic Bank, state agencies and others.
So far, about 80 creditors have joined the case including Statec, an Austrian Packaging company, Victoria Furnitures, Westlink Electricals and Hardware and Lesphine Investments ltd, a sugar distributor, who allegedly paid Sh26 million in advance for sugar supplies but was never supplied.
Other creditors are Osho Chemicals, Milicons ltd and Proparco, one of the largest secured creditors and who financed the construction of a power plant at the miller.
Others are Sygenta, Galana oil, Victoria Furnitures, Copy Cat, Omaera Pharmaceuticals, Liaison Group Limited and Babs Security Ltd.
Mumias Sugar Company technically lies in bankruptcy to the tune of US$60 million (Sh6 billion) having seen its net liabilities surpass its net assets in the year ending June 2018 making it difficult to meet its outstanding obligation to creditors.