A Kenyan court has allowed the KCB Bank-appointed receiver manager Kamal Anantroy Bhatt to take over the running of Pinewood Beach Resort and Spa in Kwale after lifting an order obtained by the establishment in November last year.
In a ruling on April 25, High Court Judge Peter Mulwa struck out the application filed by ITCO Investments Ltd (owner of Pinewood Beach Resort and Spa), clearing the way for the receiver manager to take over the management of the hotel to recover a loan of Ksh5.8 billion ($43.76 million).
Justice Mulwa stated that the application violated the doctrine of sub-judice since another matter touching on the same issues is pending before the Court of Appeal.
“Consequently, I find that both the suit and application dated November 5, 2023 before me were filed in bad faith, as the plaintiff did not reveal material information concerning the active proceedings touching on the same subject matter before the High Court and Court of Appeal in Mombasa,” Justice Mulwa ruled.
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The court heard that sometime in December 2010, Pearl Beach Hotels Ltd (PBHL), trading as English Point Marina, obtained a loan from KCB for purposes of developing the English Point Marina in Mombasa.
KCB says the loan was secured by, among other things, debentures issued by the principal debtor (PBHL) as well as an all-asset debenture dated September 12, 2012 issued by ITCO to secure an aggregate principal amount of Ksh225 million ($1.7 million).
ITCO director Alnoor Kanji opposed the appointment of the receiver manager, arguing that it was unprocedural.
Mr Kanji maintained that any other securities made were supplemental to the primary security being English Point Marina Mombasa, and the hotel would only be utilised to settle any arrears after the bank had exhausted its options in respect of the primary security. He said on August 2, 2023, the bank stormed Pinewood Beach Resort and Spa after placing it under receivership.
Mr Kanji said they reached out to the principal borrower PBHL and established that the debt had been settled in its entirety.
He said the debt was overpaid and the bank lost the right to appoint a receiver and that the debenture intends to unjustly curtail its operation and growth without first realising the principal security or exploring all possible avenues of compelling the principal debtor to redeem the facility.
Mr Kanji said the hotel was a separate legal entity from the principal debtor and that he did not participate or was not privy to the case pending in the Court of Appeal.
Oscar Obuna, the head of Credit Support Unit at KCB, said the bank advanced to PBHL cumulative principle sum of Ksh5.2 billion from 2010 to 2016 for the purpose of funding the development and construction of the English Point Marina Project.
After the principal debtor was placed under receivership upon default, KCB appointed the receiver manager on August 2, last year to manage the hotel.
