PrideInn Hotels and Investments Ltd got a reprieve on Wednesday after the Court of Appeal suspended the execution of a judgment placing it into liquidation for its inability to pay a Sh69.3 million debt.
The stay of execution of the judgment has been issued pending the filing, hearing and determination of an appeal by PrideInn Hotels and Investments Ltd against the judgment issued by the High Court.
The move follows a consent order agreed upon by the parties which will see PrideInn Hotel and Investments Ltd provide Tropicana Hotels Ltd a Sh90 million bank guarantee within the next 45 days.
“The terms of guarantee to be approved by the respondent’s advocates,” the consent order stated in part.
The consent further stated that in the event of non-compliance with the conditions (of stay), the stay of execution of the judgment will lapse.
Representatives from PrideInn Hotel Investments Ltd and Tropicana Hotels Ltd, which filed the winding up petition, together with their advocates signed the consent order.
High Court Judge Patrick Otieno had earlier allowed the winding up petition filed by Tropicana Hotels Ltd - owned by Mr Salim Sultan Moloo - saying the debt is not genuinely disputed.
Justice Otieno further ordered that PrideInn Hotels Investment Ltd would be placed under receivership until the debt is paid or discharged.
“I appoint the official receiver as the interim liquidator of the company, the order of appointment takes effect forthwith but the official receiver must take charge and running of the affairs of the company not later than October 1,” Justice Otieno said earlier.
He ruled that he found no bonafide dispute exists as the reason advanced by PrideInn was not genuine or honest.
“Therefore no challenge has been made to the foundation of the claims so as to present a bonafide dispute,” said Justice Otieno while ruling that Tropicana's request was merited.
He described the allegation of coercion by PrideInn as a wild card thrown at the court and not a genuine or honest resistance to the payment of debt.
“I find this reason to be insufficient justification for failure to pay the contracted debt, there is no genuine dispute disclosed by the company in these proceedings,” said Justice Otieno.
According to Tropicana Hotels Ltd, the debt fell due in April 2012.
It had sought an order to have PrideInn Hotels& Investments Ltd, which operates a chain of hotels in Nairobi and Mombasa, wound up and for the court to appoint an interim liquidator.