Keroche faces winding-up orders over Sh9.1bn KRA suit

Keroche Breweries chief executive Tabitha Karanja addresses the media on March 9, 2022. PHOTO | DIANA NGILA | NMG

More trouble awaits Keroche Breweries after a law firm that has been defending the Naivasha-based alcohol manufacturer in cases against the Kenya Revenue Authority (KRA) petitioned the High Court to wind up the troubled brewer over a debt of Sh233.7 million.

Hamilton Harrison & Mathews (HHM) Advocates wants the brewer liquidated under the Insolvency Act and an official receiver appointed as the provisional liquidator.

The top corporate law firm says Keroche has been unable to settle the legal dues that arose in the firm’s long-running fight with the KRA that have seen the taxman shut down the brewer over a Sh9.1 billion unpaid bill.

“In the circumstances, it is just and equitable that the company be liquidated,” the law firm says in the petition, which is to be mentioned before the High Court’s deputy registrar on October 13.

Keroche has been fighting the KRA’s bid to shut down its factory over unpaid tax.

The brewer obtained orders blocking the taxman from closing the factory pending the determination of the case.

While allowing the reopening of the company, the High Court directed Keroche to be paying the demanded tax in instalments.

Keroche, owned by the Karanja family, previously linked its woes to a Sh351 million demand, but the KRA sought to paint the brewer as a tax cheat who owes the State over Sh22 billion in unpaid taxes.

The tax battle has been charged with political undertones after its co-founder, Tabitha Karanja, opted to join politics. Ms Karanja won the race for the Nakuru senate seat in the August 9 elections. Keroche’s legal woes mounted recently after the Employment and Labour Relations court directed it to pay its former managing director, Sam Shollei, Sh45.5 million for unlawful sacking.

In the case filed by HHM, the law firm says Keroche’s debt stood at Sh233.7 million as at July this year for four different cases and continues to attract interest.

Keroche had sought to delay the demand of the payments or quash the amount but the plea was rejected by the High Court in March last year.

The law firm says the unpaid fees stem from legal services that it rendered to the company while fighting against KRA before the tax appeals tribunal.

The KRA was demanding more than Sh9.1 billion in excise duty on the firm’s fortified wines and Viena Ice ready-to-drink vodka. The law firm said it served the company demanding payment in March through email and registered post, but Keroche has refused to pay, leaving them with no option but to file the insolvency case. In March last year, High Court judge John Mativo dismissed Keroche’s bid to quash the legal fees arguing that it was excessive.

Keroche argued that the taxing master was wrong for basing the instruction fees against an erroneous assessment of tax demand. The brewer also said the instruction fees were excessive.

The judge dismissed the objection saying the taxing properly considered all the material before him and properly exercised his discretion in arriving at the decision. “I am persuaded that he applied the applicable schedule in taxing the bill. On the whole, the client (Keroche) failed to demonstrate that the taxing master misdirected himself or improperly exercised his discretion or arrived at an inordinately high or unreasonable award to warrant this court’s intervention,” the judge said.

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