The High Court has given CfC Stanbic Bank #ticker:CFC the greenlight to auction the assets of flower farm Karuturi Limited if the owners fail to clear Sh1.8 billion debts owed to the lender in three months.
The auction of Karuturi, one of the largest flower firms in the country, marks yet another dark chapter in the company’s dramatic fall from grace.
Justice Francis Tuiyott has ruled that a three-year old court order restraining the bank from auctioning the properties of the flower farm stands vacated after the lapse of 90 days.
The judge observed that the owners, Surya Holdings Limited and RHEA Holdings Limited, have admitted the pre-receivership debt and the post-receiver debt has been assessed by audit firm selected by the owners themselves.
Karuturi Ltd, one of the world’s top growers of roses and exporting more than one million stems annually, was put under receivership in 2014 after failing to service a Sh383 million loan borrowed from CfC Stanbic.
“In default of payment of the monies… the orders of injunction granted on June 11, 2014 in favour of the plaintiffs shall stand discharged and the defendants shall be at liberty to exercise all or any of its rights in respect of the advances made to the 3rd plaintiff including but not limited to the right to sell Assets covered or contained in the securities given by the plaintiffs to the defendant,” ordered Justice Tuiyott.
The judge directed the firm to settle Sh410 million pre-receivership loan in 60 days.
He further directed the owners to settle Sh640 million the company owes creditors other than the bank and Sh680 million advanced to the firm by the bank after it was placed under receivership.
The owners will further have to pay Sh100 million, being the expense incurred to preserve the assets of the company while it was under receivership.
Court records show that the bank and the owners had settled on Deloitte Consulting Limited to undertake the audit on the firm, with a view of establishing the amount owed to the bank during receivership.
The audit revealed that the flower firm has sank in further debt since it was placed under receivership. The owners objected to being held liable for the debts incurred during the receivership.
They argued that the bank manipulated the trade deficits of the firm and that the facilities advanced to the firm should not be borne by them.
The bank held that the owners should also bear the debt that was accumulated during receivership. But in his ruling the Judge observed that the audit firm was selected by both parties in the case and that the audit report did not find the receiver managers misconducted themselves.
The judge further ruled that the owners have not produced convincing reason to stop the court from ordering them to settle outstanding debt.