Reprieve for firm in Sh300m loan dispute with I&M

I&M Bank has been temporarily stopped from auctioning property belonging to a plastic bags manufacturer in order to recover an outstanding loan of over Sh300 million pending determination of the actual amount owed.

Lady Justice Margaret Muigai directed the lender to make available in court a reconciliation of the accounts of Hi Plast Limited before it can proceed to exercise power to auction securities offered by the plaintiff company for the loan.

Justice Muigai heard from lawyer Eddy Orinde that Hi Plast is contesting the amount demanded by I&M, arguing that there is an interest overcharge of Sh53 million.

Giving directions, Justice Muigai said a tabulation of the account of the company should be availed by the bank to determine the amount owing.

She directed that auctioneers Garam and Purple halt their move to sell the properties until June 11, 2019 as they await proper directions.

Hi-Plast previously told the court that that the properties targeted for sale, including its Industrial Area bags factory and Westland properties, are currently worth Sh812 million.

Hi-Plast ran into financial trouble following the government ban on plastic bags in 2017. It had borrowed Sh300 million from I&M in 2015.

Hi Plast says it engaged an audit firm that found the Sh53 million interest overcharge, claiming I&M had priced its loan above the legal cap of four percentage points above the central bank rate that currently stands at 9 percent.

A liquidation case has been instituted by an unsecured creditor against Hi Plast and is being heard by another judge.

Justice Muigai said she would peruse both cases relating to loan repayment then avail summaries to confirm whether the matter is administrative or an insolvency one.

The case will be mentioned on Tuesday.