Reprieve for stalled city complex developer facing insolvency suit

Justice David Majanja.
Justice David Majanja. FILE PHOTO | NMG 

A company constructing a 17-storey building in Nairobi’s central business district has been allowed to negotiate with a contractor with a view to settling a dispute out of court.

Justice David Majanja gave North Eastern Investment until next week to negotiate with East African Development Engineering & Trading to settle the dispute.

The investment company went to court, arguing the contractor had threatened to institute insolvency proceedings against it after failing to pay a debt of Sh7 million.

According to Mr Abdirahin Haithar Haji, a director of North Eastern, the liquidation is totally unwarranted because the company is a viable business concern with assets in excess of Sh1 billion. He said the liquidation offends provisions of the Insolvency Act, which mandates a creditor to seek other remedies.

Documents filed in court showed that the contractor secured the contract to erect the 17-storey building. In the arrangement, Kenya Commercial Bank allegedly agreed to finance 100 percent of the construction cost but by December 2016, the lender said it would only finance 80 percent of the project.


The investment company later told the contractor to continue with the project but on new terms, a proposal that was rejected. The parties later agreed to terminate the contract in April 2017 and the company agreed to refund the contractor Sh22 million.

The amount was for expenses like engaging architects and obtaining drawings, the quantity surveyors, planning and buildings approvals. The company paid Sh15 million to the contractor who threatens to institute insolvency proceedings over the Sh7 million balance.