Owners of troubled flower firm Karuturi Limited have moved to the Court of Appeal seeking to salvage their property even as an auction by CfC Stanbic Bank closed Tuesday.
The owners accuse the bank of acting in bad faith when it commenced to auction movable property on May 2, arguing that it was seeking to pre-empt their appeal.
Karuturi, one of the world’s top growers of roses exporting more than a million stems annually, was put under receivership in 2014 after failing to service a Sh383 million loan borrowed from CfC Stanbic.
The receiver managers on May 2 advertised for sale of some of the movable assets which include 14,00 greenhouse irrigation equipment, generators, cold storage units, farm tools, motor vehicles and IT equipment.
“The hurried and irregular action by the respondents shall cause the applicants irreparable loss which cannot be compensated by damages given that the assets are unique and of irreplaceable value to the applicants,” says Kotha Pandurangavittal, Director of Karuturi Group in papers filed at the appeal court on May 7.
The High Court in January gave the bank the green light to auction Karuturi assets if the owners fail to clear Sh1.8 billion debts owed to the lender in three months, which the owners appealed. Justice Francis Tuiyott ruled that a three-year old court order restraining the bank from auctioning the property of the flower farm stands vacated after the lapse of 90 days.
The judge directed the firm to settle Sh410 million pre-receivership loan in 60 days.
He further directed the owners to settle Sh640 million that the company owes creditors other than the bank, and Sh680 million advanced to the firm by the bank after it was placed under receivership.
But the owners accused Stanbic of using the receivers to suppress its sales by more than Sh2 billion to justify disbursement of more loans and prevent it from coming out of forced management.
Outside the court, in March, the owners announced that they had secured an investor to inject funds into the business as they fought to save their prized assets from being auctioned but no details have been made public since then.