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Appellate court halts planned auction of DusitD2 complex

The planned auction of a multi-billion property in Nairobi’s
Riverside Drive where the famous DusitD2 hotel stands have been put on hold
pending the determination of an appeal filed by I&M bank which says the
property owners owe it Sh2.82 billion.

The property had been advertised for sale in January, over a
debt of Sh5 billion arising from a botched sale deal between the owners- Cape
Holdings ltd and Synergy Industrial Credit. 

The lender moved to court saying the property would be sold,
a move that would make it impossible for the bank to recover its debt.  “The
record discloses that the charged property is yet to be sold. But, unless an
order of stay of execution is granted, the 1st respondent (Synergy) will
proceed to execute against the 2nd respondent’s (Cape Holdings) sole property,”
Justices Daniel Musinga, Wanjiru Karanja and Agnes Murgor said.

The Judges said if the property is auctioned, it would make
the appeal useless. “As such, in the interest of preserving the charged
property within the remit of this Court until the appeal is heard and
determined, an order of stay of execution is merited,” the Judges added.

The bank’s lawyer William Kabaiku submitted that the High
Court approved the sale of the company’s only asset without allowing the
administrator to prepare a proposal for the creditors’ consideration. He said
the judge failed to consider the administrative processes necessary for the
execution of a decree and also failed to consider the legitimate interests of
the creditors of the property owners, and the need to preserve its assets so
that they can be maintained as a going concern.

Mr Kabaiku said the court should determine who between a
secured creditor and a person holding a court order, has the priority over the property.

Senior Counsel Ahmednasir Abdullahi for Synergy opposed the
appeal saying the bank was not a party to the proceedings in the High Court. He
also said the case has already been determined by the High Court to the Supreme
Court and the appeal was a ploy to reopen the case.

Moran Auctioneers put up for sale the property after Cape
Holdings ltd lost an 11-year-old court battle with Synergy Industrial Credit,
which is demanding Sh4.2 billion plus interest after a botched sale deal.

The property known as 14 Riverside Drive near the University
of Nairobi’s Chiromo Campus sits on a 5.2-acre parcel of land and comprising of
five office blocks, a five-star hotel (Dusit D2) with a swimming pool, a
parking silo, a food court, and cafeteria.  The office blocks comprise the
ground floor to six floors and the ground floors have banking halls, and shops,
while the hotel has seven floors with 101 rooms and suites. 

The hotel has a bar, restaurant, library, meeting rooms, and
a gym and amenities including a spa, swimming pool, and an open-air restaurant.
The parking silo can accommodate 625 vehicles with an additional 34 parking

An advertisement put in the newspaper yesterday stated that
the property will be sold either as a whole or based on blocks or offices to
single or multiple buyers.   “Bidders
must place a deposit of Sh5 million and must pay 25 percent of the purchase
price at the fall of the hammer and the balance should be cleared within 60
days,” the advertisement read.

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