The Commercial and Tax Division Court has authorised the liquidation of assets belonging to aircraft charter and maintenance firm DAC Aviation International (DAC) by KCB Group over failure to repay Sh1 billion debt.
Justice David Majanja last week struck out a suit filed by DAC’s guarantor Emmanuel Anassi seeking an injunction to restrain KCB from interfering with the embattled firm’s operations or taking over the suit property.
Mr Anassi had expressed his interest in seeing that the property in question was sold at the highest possible price to secure DAC’s business and clear the owed debt, submitting that KCB had acted in bad faith as it had proceeded with negotiations to secure a potential purchaser.
But in his ruling, Justice Majanja directed Mr Anassi to explain why the injunction to block the auction should be granted given that DAC was already under liquidation.
“I am constrained to strike out the suit as the plaintiff, in the position of director or shareholder of the company or as a guarantor, lacks any standing to file this suit to protect the property of the company,” said Majanja.
“Under section 444 of the Insolvency Act, once the liquidation order is made, the liquidator assumes control of the property of the company to the exclusion of the shareholders and directors…The suit is therefore struck out. The plaintiff shall pay costs of the suit and application assessed at Sh20,000.”
In an earlier application on July 9, 2020, seeking to secure a nine-month debt repayment break, DAC detailed that it was heavily indebted and that all its assets were charged to KCB.
In the filings, the firm said that the facilities obtained from the lender included those that had been restructured and enhanced in July 2019 leaving it indebted on account of $1 million (Sh145.3 million at current exchange rates) overdraft, and two long-term loan facilities of $1.9 million (Sh276.1 million) and $1.7 million (Sh247 million) secured for working capital requirements.
DAC submitted that it had been providing humanitarian air charter services for two decades in conflict areas such as Sudan, South Sudan and Somalia, arguing that its business is capital-intensive and that any minor disruption in the revenue stream has far-reaching consequences on its bottom line.
