Triton liquidator moves to court to stop sale of assets

The liquidator of fallen oil marketing company Triton has gone to court seeking to block two companies associated with its fugitive owner, Yagnesh Devani, from disposing of assets estimated to be worth billions of shillings, setting in motion another legal battle that could delay the anticipated winding up of the collapsed petroleum company.

In an application expected to be heard at the Milimani Commercial Court on Monday morning, Triton’s interim liquidator, Ponangipalli Rao, is seeking orders to stop managers of the two firms - Dreamcatchers Limited and Camelot Estates - from selling prime assets which are suspected to have been developed using money drawn from Triton Petroleum Company’s accounts.

Mr Rao argues in papers filed in court that the sale of the assets - which were not attached by any of Triton’s creditors - may jeorpadise unsecured creditors owed money by the collapsed company.

Among the property said to be in the process of being sold are a housing development located along General Mathenge Drive owned by Dreamcatchers Limited and Camelot’s “multi-billion shilling” property complex situated on Nairobi’s Waiyaki Way.

Triton’s main creditors include the Kenya Commercial Bank, Fortis Bank Nederland NV PTA Bank plus a host of other unsecured creditors including some oil marketing companies.

“The said property would appear to have been developed using funds from the now defunct Triton Petroleum Company and would be some of the assets that may form part of the liquidation account for unsecured creditors of Triton once the winding up proceedings against Triton are concluded. Its imperative that these assets are preserved and protected pending finalisation of the winding up proceedings,” said Court papers filed by the liquidator through Daly & Figgis Advocates last week.

Mr Rao was appointed to manage assets of Triton, a firm belonging to Mr Devani, which was placed under receivership last December.

Mr Devani fled the country late last year in the wake of mounting pressure by oil companies following Triton Petroleum’s failure to make deliveries for oil imports estimated to have been worth 7.6 billion shillings.

A warrant of his arrest was issued by a Nairobi court and Interpol ordered to pursue him.

Mr Devani was sued for allegedly stealing Sh2.7 billion from KCB.

The bank has also sued Triton for Sh2 billion for oil imports secured by the bank through various debentures.

Several of his senior managers and workers including Peter Kimathi, William Mundia and Sunil Somai were arraigned in court and charged with various criminal offences relating to the Sh7.6 billion oil scandal.

The directors however argued before court that they could not take plea on behalf of the company, and on Thursday a Nairobi court ruled that the three would not be facing criminal charges.

According to Triton’s liquidator, Mr Devani’s “proxies” are suspected to have been behind the plot last week to dispose of the assets held by Dreamcatchers Ltd and Camelot Estates.

“The purported sale of the said development is an attempt by Mr Devani, through his proxies, to dispose of assets obtained through diverted funds from Triton whose assets would be susceptible to being recovered or sold for the benefit of unsecured creditors, ” says Mr Rao in his submission adding that the proceeds of the sale should be held in trust for Triton.

This is the latest twist in the scramble for the assets by the major creditors of Triton.

The biggest tussle has been for the most valuable asset of the company––the massive multi-billion shilling oil terminal, which Mr Devani was building in Mombasa before his business empire imploded early this year.

In January, the High Court barred Mr Devani from selling or disposing of his shares in various companies associated with him.

But the liquidator argues that since there are no orders barring the said companies from disposing of their assets, there is nothing preventing them and Mr Devani’s other associated companies from selling the assets and leaving the companies as mere shells.

“The reason for the urgency is that the prime assets of the defendants valued at over Sh1 billion are in the process of being sold by the defendants,”

In the event that the said assets have already been sold prior the filing of the application, the liquidator wants the proceeds after the payment of any secured creditors be deposited with the Court or in an escrow account pending the hearing and determination of the suit.

Mr Rao argues a sale agreement would appear to have been concluded for both the assets.

Creditors have been locked in a row over the structure to be adopted in disposing of some of the assets has delaying the anticipated sale within the court’s stipulated time.

The court documents seen by the Business Daily indicate that whereas the property owned by Camelot is charged to the East African Development Bank, the proposed sale price is substantially higher than the reported outstanding amounts owed to the Bank.

Surplus from any sale, Mr Rao argues, should be held to the benefit of the said creditors.

A deed of settlement signed between Triton, Mr Devani and the Receivers on March 16, 2009 stipulates that after the sale of Camelot property, for not less than Sh1.1 billion, Sh470 million would be paid to receivers and Sh410 million to EADB which has a legal charge of the asset.

In August, the High Court ruled that the assets of the Triton Bulk Storage Company be sold in what was a win for Triton’s main creditor KCB and its appointed receiver managers.

Proceeds of the sale were to be banked in a joint account of KCB and Fortis Bank of Netherlands.

High Court judge Luka Kimaru ordered the disposal of the property in Mombasa within 60 days and that the money be deposited in an escrow account in a reputable bank to be managed by the advocates of KCB and Fortis Bank.

Justice Kimaru dismissed the application by Fortis Bank through Mr Keith Fraser of Hamilton Harrison and Mathews who wanted the entire proceeds handed over to the Dutch bank by virtue of a Sh75 million charge on the property.

Milimani Commercial Court has also barred Triton from interfering with its investments in shares of the Nairobi Stock Exchange listed companies estimated to be worth over the Sh2 billion.

Mr Devani is also stopped from offering for sale shares or assets held in 19 other companies until a case filed by KCB is heard and determined.

Last week, in yet another tussle over the Triton Saga, Kenol/Kobil filed an application in court seeking permission to record an arbitration award before a judge.

In a letter filed at the High Court in Nairobi, the oil dealer wants the case listed for the award believed to have been arrived at after a months-long battle with Kenya Pipeline Company (KPC).

In July, KPC objected to an arbiters ruling that ordered them to produce a Sh1 billion bank guarantee before the talks were concluded.

Then, the oil dealer sought over Sh3 billion against KPC. Justice Kimaru, however declined to grant the order, saying the matter was before an arbiter.

Kenol/Kobil has been seeking orders to attach KPC’s three terminal depots in Nakuru, Kisumu and Eldoret to realise the Sh1 billion guarantee awarded by the arbitrator.

Several oil companies have sued KPC over last year’s Triton scandal.

In the cases, the oil firms sued KPC for allegedly contravening a transport and storage agreement earlier signed with the parastatal.