KCB Group on Monday pleaded with the Court of Appeal to suspend a decision that kicked out its receiver manager PVR Rao as the administrator for Mumias Sugar Company.
The lender through senior counsel Kiragu Kimani told a bench of three judges that it would be unfair for another administrator to preside over the assets of the ailing miller yet it was a secured creditor.
Mr Kimani told justices Asike Makhandia, Sankale ole Kantai and Jamila Mohammed that its appeal would be rendered useless if the order is not suspended.
“The appeal raises weighty issues, which should be considered by this court,” he said.
The application was supported by Sarrai Group of Uganda and Gakuamba Farmers Cooperative Society who said the Uganda-based company had already contracted farmers for sugarcane farming who will have no recourse if the decision is not suspended.
The judges suspended the High Court decision pending ruling on September 23.
The appeal was opposed by West Kenya through senior counsel Paul Muite, Kimeto & Associates and Dubai Based Vartox Resources Inc.
The High Court kicked out Mr Rao as the administrator for Mumias in March because of favouring KCB at the expense of other creditors.
Justice Alfred Mabeya then appointed Kereto Marima in his place. The court later granted Sarrai Group a temporary order, to stay at Mumias as the firm pursues an appeal.
The company argued that it stands to suffer an investment loss of Sh5.6 billion if the lease remains cancelled.
The miller was placed under receivership by KCB Group in 2019 over an unpaid loan of Sh545 million and appointed Mr Rao as the receiver manager. The court later made him the administrator and directed him to complete the leasing process and report progress to the creditors.
The bids were opened and Sarrai announced the successful bidder on December 22. The Uganda-based company moved into the premises on December 24 and immediately started tilling the land, paving roads, and undertaking repairs at the factory.
The lease was challenged by other bidders on grounds that it was shrouded in secrecy. Justice Mabeya later cancelled the lease saying it was not in line with the best interest of Mumias.