Companies

Mumias receiver fights creditors bid to question him on accounts

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Mr Ponangipalli Venkata Ramana Rao during a May 2020 briefing. FILE PHOTO | NMG

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Summary

  • Two creditors- a lawyer who previously acted for the company and who is owed Sh96 million and a supplier, sought to cross-examine Mr Rao over the accounts he filed in court last month.
  • The receivership accounts shows that the company has received revenue of up to Sh1.4 billion.
  • Through his lawyer George Kashindi, Mr Rao said there is no basis for his cross-examination because Ms Kimeto has not disclosed the questions she needs answers to.

Mumias Sugar Company #ticker:MSC administrator PVR Rao has opposed calls by creditors of the miller to be cross-examined over its accounts for the last two years.

Two creditors- a lawyer who previously acted for the company and who is owed Sh96 million and a supplier, sought to cross-examine Mr Rao over the accounts he filed in court last month.

Lawyer Jackline Kimeto wants Mr Rao to answer questions surrounding professional and legal fees, which run into millions of shillings, donations, public relations expenses, security costs amounting to more than Sh150 million, repairs and maintenance of the distillery and the factory, among others.

It is also her view that the money the receiver generated in the last two years should have paid KCB’s #ticker:KCB debt.

The receivership accounts shows that the company has received revenue of up to Sh1.4 billion.

But through his lawyer George Kashindi, Mr Rao said there is no basis for his cross-examination because Ms Kimeto has not disclosed the questions she needs answers to.

“We, therefore, have no instructions to accede to your request to cross-examine the second respondent,” Mr Kashindi said.

In a case to be heard on March 7, Ms Kimeto also wants the court to order a forensic audit of the company’s accounts arguing that despite being appointed the interim administrator, Mr Rao has failed to operationalize the administration process in accordance with the Insolvency Act as well as directions issued by the court.

“The 2nd respondent has completely failed or refused to comply with the above provisions of the Insolvency Act in so far as his appointment is concerned and his conduct is detrimental to the administration process to the vested interests of the applicant and all stakeholders and continues to undermine the constitutional authority of this court,” she said.

Another law firm, Wekesa and Simiyu Advocates also wants Mr Rao to demonstrate the time frame that the highly contested lease will take to repay KCB’s debt.

Also sought is a copy of the evaluation criteria prepared at the time of making the invitations for bids to lease the assets of the company and Mr Rao’s charges per year, since his appointment as the receiver up to December 31, last year.

“Please furnish copies of the consents procured by yourself and the successful bidder from the Competition Authority and the Capital Markets Authority and any other statutory bodies as condition precedents prior to entering any lease and handing over the company assets to Sarrai Group,” the letter adds.

Mr Rao awarded the 20-year lease to Sarrai Group in December but several bidders have challenged it in court.

While appointing the interim administrator last year, Justice Mabeya allowed Mr Rao to proceed with the leasing of the plant but said the manager will be required to do it in compliance with Competition Act and file regular updates to the court.

He had also directed Mr Rao to file a detailed statement of account of all payments and receipts arising from the receivership of the company from the date his appointment to date.

“At intervals of six months, to report to Court on the operations of the Company and present its financial accounts for the period in question,” the Judge said and directed the manager to file in court, within 60 days, a statement on the outstanding and the actual claims of all the secured creditors making disclosure as to the time the respective facilities became non-performing and the amount outstanding at the time.

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