Karuturi reveals CfC security also held by India bank
Karuturi flower farm workers barricade a road in protest to demand payment arrears. The firm was last month put on receivership for failing to pay a Sh383 million loan owed to CfC Stanbic Bank. FILE
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Karuturi argues CfC cannot sell off the land used to secure the loan, and further accuses the Kenyan bank of being behind its financial woes by terminating its credit line.
CfC placed Karuturi under receivership last month after the flower firm defaulted on the loan.
Naivasha-based flower firm Karuturi Limited has disclosed that assets used to secure a Sh383 million loan from CfC Stanbic are also charged to an Indian bank.
In a court application filed Monday, Karuturi argues CfC cannot sell off the land used to secure the loan, and further accuses the Kenyan bank of being behind its financial woes by terminating its credit line.
CfC placed Karuturi under receivership last month after the flower firm defaulted on the loan.
Karuturi, however, through its sister companies Surya Holdings Limited and RHEA Holdings Limited, claims CfC cannot sell off the land since the assets are shared security between CfC and ICICI Bank, an Indian bank.
Karuturi is seeking “a declaration that the defendant (CfC) is in breach of its contractual obligations contained in the various facilities documents and that they cannot rely on the same contract, the contracts being the charges, debentures, letters of guarantee and indemnity and facility letter,” says Karuturi Global Limited CEO Shireesh Jain in a sworn affidavit.
Karuturi further claims that CfC, without notice, stopped disbursing agreed banking facilities last year making it difficult for the flower firm to pay its debts. This led to one of the suppliers, Allpack Industries Limited, filing a winding up case that is still pending in court.
The court in October issued an order barring All Pack from auctioning the flower firm’s assets.
Karuturi has applied for the High Court to lift the receivership pending the hearing and determination of the suit arguing that the CfC’s action is in breach of the October court order.
The court lifted orders stopping the receivership after it emerged that Karuturi failed to disclose its agreement with the bank, which allows CfC to appoint receivers in case of default.
Surya Holdings and RHEA disclose in the court documents filed Monday that they owns all land on which Karuturi does flower farming.
Mr Jain says the assets used as security with CfC Bank are valued at Sh7.8 billion ($90,951,630). The same assets have been used under ‘securities sharing agreement’ with CfC to secure Sh3.44 billion ($40 million) from ICICI Bank.
He says the appointment of Kieran Day and Ian Small as receivers by CfC is in breach of the shared security agreement, arguing that the bank has already issued notices to dispose of the charged lands in breach of the agreement.
CfC is accused of failing to harvest and export the flowers since the takeover leading to a loss of Sh11.5 million. This, they allege, is in a bid to devalue the firm for planned sale.
“The plaintiffs have reliable information that the defendant seeks to dispose the assets that are worth over $100 million (Sh8.6 billion) to a cabal of politicians and well-connected businessmen,” says Karuturi in court documents.
The firm claims that as at the end of February it has paid the outstanding instalments and, therefore, wants the High Court to compel the bank to withdraw the receivers from the farm.
CfC in its previous court documents said Karuturi directors have a history of alleged tax fraud.
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