DusitD2 administrator loses legal bid to stay on


Dusit D2 Hotel. FILE PHOTO | NMG

The Court of Appeal has dismissed an application by an administrator appointed by I&M Bank to continue managing multi-billion-shilling assets belonging to Cape Holdings Ltd, including the property where DusitD2 hotel stands.

The appellate court rejected the application by Vruti Shantilal Shah to continue managing the property, stating that it did not have jurisdiction to extend or re-appoint an administrator whose term had expired.

Justices Asike-Makhandia, Sankale ole Kantai, and Mwaniki Gachoka said the prayer could not be granted for doing so would be tantamount to reinstating or re-appointing an administrator whose term had expired by operation of law, a move which is not permissible and that the prayers sought were wanting before even going into the merits of the application by Ms Shah.

“On the second principle, we are not persuaded that the intended appeal will be rendered nugatory as argued by the applicant. Accordingly, we find that this application is not merited and we dismiss it in its entirety with costs to the 1st respondent (Synergy Industrial Credit Ltd),” the judges said.

Ms Shah had pleaded with the court for an extension of her term as the administrator of Cape Holdings, a company under administration arguing that it was in the interest of justice and for the good of all creditors that she continues to oversee the property.

The former administrator submitted that under section 522 of the Insolvency Act, the administration’s objectives are to maintain the company as a going concern and achieve a better outcome for the company’s creditors as a whole.

The court heard that had the administrator not obtained the stay orders, the company would have been liquidated on account of the debt being more than Sh5.4 billion, leaving nothing to the other creditors.

Ms Shah’s term ended in June last year and her attempts to seek an extension were rejected by High Court Judge Alfred Mabeya saying she had not shown what she had done for the 12 months she was in charge. She then moved to the Court of Appeal.

The court was informed that there were several pending appeals and some of them seek to determine the priority of rights between a debenture holder and an unsecured creditor.

The administrator said Justice Mabeya failed to find that public interest and supremacy of the law depended on the extension of the administration for the just determination of the pending appeals.

She further said the judge erred in failing to find that she had taken active steps in carrying out the administration in a manner to secure the interests of all the creditors.

I&M Bank though lawyer William Kabaiku supported the application arguing that it stands to suffer irreparable loss if the application is not allowed.

Senior counsel Ahmednasir Abdullahi for Synergy Industrial Credit submitted that there was no link between the outcome of the appeals and the process of administration as the debt is recoverable from the company (Cape Holdings).

Mr Abdullahi added that the administrator was in essence seeking the court’s nod for re-appointment yet her term had expired. He stated that the argument there will be a constitutional crisis in Kenya and chaos in the streets of Nairobi if not granted cannot be an arguable ground of appeal.

According to Mr Abdullahi, after failing to escalate the dispute to the Supreme Court, the company employed a different tactic of using the administrator as a tool to defeat his client’s bid to sell the property.

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