The High Court has set aside a ruling delivered over a year ago allowing UBA Bank to auction a parcel of land on Lang’ata Road belonging to the collapsed Uchumi Supermarket over a debt of Sh172 million.
Justice Francis Gikonyo overturned the ruling made in November 2023 following an application by the Treasury.
The Treasury argued that allowing the sale to proceed would expose the public to a loss of Sh1.2 billion, as it was the single largest creditor of the collapsed retail chain.
“Accordingly, the ruling dated and delivered on November 3, 2023 is hereby set aside ex debito justitiae (as a matter of right),” said the judge.
Justice Gikonyo, however, pointed out that since the application by the lender remained undetermined, all the applications filed by the parties in the dispute would still be considered by the court.
“Be that as it may, I doubt the setting aside of the ruling abrogates the 1st defendant’s (UBA’s) statutory power of sale or compromises any lawful consent amongst the parties,” said the judge.
The Treasury sought a review of the ruling, arguing that its objection to the application by the lender was not considered by the court before the decision was made.
UBA opposed the application saying the government would not suffer any prejudice if the ruling is not reviewed.
This was because the government held a second-ranking charge over the property and could not, therefore, have priority over UBA’s charge and override its rights.
The bank added that the sale should proceed, and the balance would be utilised to service the debt owed to the government and the general pool of creditors.
UBA Bank submitted that the dispute was a purely commercial matter where parties were bound by contract.
The court further heard that a review of the ruling would compromise a consent signed by the company and the lender on March 5, 2024, to save the property from the forced sale after it emerged that the government intended to compulsorily acquire the land.
The lender added that a Company Voluntary Arrangement (CVA) was in existence and the government’s interests were fully catered for.
The bank moved back to court accusing the collapsed retail chain’s supervisor of failing to call a creditors meeting as directed by the court in June 2020 and for further delaying in repayment of the debt.
Uchumi had admitted delaying calling a creditors’ meeting but said it was reconciling claims before making any payments. The court heard that the delay was occasioned by logistical challenges occasioned by the Ministry of Health protocols to contain the spread of Covid-19 pandemic.
The High Court put a stop to all planned sales and pending debt recovery cases, outstanding loans, and rent claims against Uchumi, in favour of the CVA.
In the CVA, the parties agreed that all the claims for rent and interest and outstanding loans would be settled in the agreement as the court stopped proceedings against the former retailer and any landlord could re-enter the premises with the permission of the court.
More than 21 suppliers and banks were owed Sh4.2 billion, which would be settled under the CVA.
