The former Nakumatt Supermarket CEO, Atul Shah will lose personal property worth Sh2 billion over loans offered to the collapsed retailer after he failed to stop the Bank of Africa from auctioning them.
The High Court has given Bank of Africa the go-ahead to confiscate and auction the property, registered under the name of Collogne Investments on August 24th to recover Sh700 million advanced to the collapsed retail chain.
Collogne Investments which is registered to Mr Shah had argued that the property was used as security for other loans and that it would lose office space if the auction were allowed to proceed, however, Justice Mary Kasango dismissed the plea.
“Bearing what is before me I am of the view that the plaintiff has failed to demonstrate that its appeal is not frivolous and I do find that the defendant bank stands to suffer greater hardship if an injunction is granted since the debt is not being serviced,” Justice Mary Kasango said.
Bank of Africa told the court that the auction was lawful, arguing that the directors of Nakumatt were not protected by the retail chain’s insolvency.
While all the creditors vowed to attach assets owned by the Shah family to recover the billions of shillings lent to Nakumatt. The bank is the first to act on the threat to seize the assets
Nakumatt holdings closed shop in January with debts estimated at Sh30 billion — including Sh18 billion to suppliers, Sh4 billion to commercial paper holders and the rest to banks. The banks have been more aggressive in pursuing their unpaid loans, with assets worth Sh3.68 billion linked to Mr Shah and his family targeted for seizure.
The Directorate of Criminal Investigations’ anti-banking fraud unit is investigating Nakumatt over alleged theft and money laundering.
Kenyan Business Feed is the top Kenyan Business Blog. We share news from Kenya and across the region. To contact us with any alert, please email us to [email protected]
