Politics and policy
SK Macharia gets nod to challenge bankruptcy order
Posted Wednesday, August 1 2012 at 20:43
Royal Media Services chairman SK Macharia on Wednesday got a reprieve after a judge allowed him to challenge a looming bankruptcy bid in the Court of Appeal.
However, Justice Alfred Mabeya ordered him to increase the Sh35 million he deposited last year as security to Sh45 million, which will be held in a reputable bank in the joint names of his advocate and the petitioner’s - Ocean Freight Transport Company.
“I am of the view that the security offered be increased to a reasonable sum, considering the amount the respondent claims was due as at January, 2011,” ruled Justice Mabeya.
Consequently, the judge stayed the execution of the bankruptcy orders issued last year by Commercial Court judge, Justice Martha Koome, until the dispute is heard and determined by the appellate court. Justice Koome has since moved to the Court of Appeal.
The judge ruled that if Mr Macharia and his wife , Purity Gathoni Githae, were denied the stay of the bankruptcy proceedings, their affairs at the Royal Media Services would be taken over by the official receiver and would have negative effects “as they can no longer hold directorships thereon.”
“It may be that the removal of the applicants from the management of the company may have a permanent and irreversible negative impact and lead to substantial loss,” he said.
Justice Mabeya also noted that if Mr Macharia’s appeal succeeds, the effect of the receiving order may not be easily reversed.
Through his lawyer Gibson Kamau, Mr Macharia pleaded with the court to be allowed to challenge the bankruptcy order.
The dispute saw Mr Macharia appearing in person at the Judges and Magistrates Vetting Board to complain against Justice Koome’s ruling that he be declared bankrupt.
Justice Koome had ordered the assets of Mr Macharia and his wife be put under a trustee appointed by the government.
Mr Macharia sought an undertaking to deposit in court Sh35 million, an equivalent of the amount being demanded by Ocean Freight managing director Livingstone Waithaka, who had moved the court to declare the businessman insolvent after a land transaction.
When the judge issued the orders that Mr Macharia’s estate be placed under a government trustee, the official receiver was required to conduct an inventory of his assets and thereafter invite all the creditors who may have a claim against the couple to join the proceedings.
But after depositing the security, the receiver was temporarily stopped pending the determination of the dispute.
Mr Macharia, who owns Citizen TV and several FM radio stations, was sued for failure to pay Mr Waithaka, Sh500,000 after a summary judgement was entered by Justice Kalpana Rawal in 2001.
The money was to attract a monthly interest of 19 per cent and was backdated to December 1986. At the time of filling the bankruptcy proceedings two years ago, the debt had reached Sh34.9 million.