Karuturi claims CfC blocking bids to buy out loans
Employees of Karuturi Limited spray flowers in the past. PHOTO | FILE |
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Karuturi claims in court papers that the international investors want to access the flower firm’s premises and financial statements, but the lender has allegedly blocked the deal by refusing them entry.
Flower farming company Karuturi Limited has accused CfC Stanbic Bank of blocking international investors who want to buy out loans that have seen the firm placed under receivership since February 10.
Karuturi claims in court papers that the international investors want to access the flower firm’s premises and financial statements, but the lender has allegedly blocked the deal by refusing them entry.
The firm was placed under receivership by CfC Stanbic Bank after it allegedly defaulted on repaying a Sh383 million loan, which triggered a protracted court battle pitting the two parties.
“Despite the plaintiff’s requests, the managers and receivers have declined and continue to decline, without any reason(s) whatsoever to grant the plaintiffs access to either the company’s premises or financial records,” says Karuturi in the court documents.
The company on August 29 told the court that the investors will need to see the flower firm and access the financial statements in order to buy out the loans. The information is also needed by the parent firm, Karuturi Global Limited, to prepare financial statements to be filed with the Indian Stock Exchange as a statutory duty.
Karuturi named Bell House Capital International, Bhama Consulting of SSG Capital Hong Kong and Axis Bank Limited as the investors who are willing to buy out the debts.
Justice Eric Ogola on August 29 granted the orders requiring the receiver managers to allow access to the flower farms and directed the receivers to facilitate the proposed deal.
But this victory was short-lived as the receivers appointed by the bank moved to court last Friday and convinced the judge to suspend the orders. The receivers argued that the orders granted by the court are final and should not have been granted without a hearing involving all parties.
They further claimed that they are not party to the suit and had been denied opportunity to be heard. The receivers questioned Karuturi’s right of sale, arguing that having defaulted and the loan becoming due, they could only regain the right of redemption by paying the debt in full.
The receivers said Karuturi having obtained an injunction in June halting auction of the flower firm by the receivers was contradicting itself by getting an order requiring the receivers to facilitate the sale. The receivers claimed they are not the owners of the assets and cannot enter into any transaction for sale.
Regarding the financial statements, they said they have no obligations to prepare audited financial statements, arguing that as receivers they are required only to send to the registrar, the bank, and the company an abstract within two months after expiry of 12 months.
Justice Ogola suspended the order and directed the case to be heard by Justice Francis Gikonyo today. Justice Gikonyo in June ruled that it was in the interest of justice to preserve the property pending determination of the suit, especially as the receivers have reported that the business is recovering.
The judge made the ruling after Surya Holdings and RHEA Holdings Limited — Karuturi’s sister companies — moved to court arguing that they own all assets and land on which Karuturi does its farming, which were pledged as security for CfC.
