- Karuturi, owned by an Indian multinational, went under in February 2014 after it faced cashflow problems and was placed under receivership.
The High Court has given creditors of the collapsed Karuturi Limited a go-ahead to begin the winding up of the once vibrant flower firm.
Justice Fred Ochieng has ruled that creditors may continue using the old laws that were amended last year to liquidate Karuturi’s assets, as the petition to wind up the firm was filed before the changes in the law.
Karuturi’s shareholders had protested at the use of the repealed provisions of the Companies Act which saw creditors appoint PricewaterhouseCoopers (PWC) as the firm’s liquidator.
Under the Insolvency Act, a liquidator can only begin the sale of assets after seeking permission from the government’s Official Receiver. The shareholders argued that the Official Receiver had not sanctioned PWC’s move to liquidate Karuturi.
But Mr Justice Ochieng argued the petition that saw Karuturi’s winding up sanctioned was filed in 2013, before the enactment of the Insolvency Act hence PwC’s appointment as liquidator was done legally.
“The appointment of the receiver managers is a step relating to a past event. Therefore, even if it is a step that was taken after the commencement of the Insolvency Act the applicable law is the Companies Act to the exclusion of the Insolvency Act. The liquidators are at liberty to call for a meeting at the earliest opportunity,” he ruled.
Karuturi, owned by an Indian multinational, went under in February 2014 after it faced cashflow problems and was placed under receivership.
Karuturi has had a bumpy ride in recent years amid piling debts and rows over tax payments. Its troubles peaked in late 2012, when the Kenya Revenue Authority began an audit of its cash and tax transactions which revealed that it used transfer mispricing to avoid paying nearly $20 million (Sh2.1 billion) in corporate income tax.
The firm also had a stand-off with CfC Stanbic Bank over a Sh383 million debt that saw the bank put the flower firm under receivership in early 2014.