KCB seizes English Point Marina over Sh5.2 billion debt

KCB Group has seized English Point Marina for a second time after court lifted a July ban blocking the bank from taking over the property over Sh5.2 billion debt.

Court of Appeal has frozen high court orders by Justice Dora Chepkwony, that blocked KCB Group’s appointed receiver-manager Kamal Anatroy Bhatt from taking over English Point Marina without disclosing the reasons.

KCB Group seized the Mombasa luxury property in June, sparking a court fight with the owners that saw the Bank kicked out a month later.

KCB now returns to the property until the appeal against the high court ruling is heard and determined setting the stage for a long court fight and multiple suits on the property.

“We hereby give our decision granting the notice of motion dated 22nd July 2022 and issue an order staying the Ruling and Orders of the Honourable Lady Justice Dorah Chepkwony delivered on 12th July 2022, and stay any further proceedings in High Court Commercial Court, Case No. E201 of 2022, Pearl Beach Hotel Limited vs KCB Limited & Kamal Anantory Bhatt, pending the hearing and determination of the applicants’ intended appeal,” the three bench Appeals court judges said.

Luxury property

“We shall give the reasons for our decision on the 14th October 2022.”

English Point Marina is owned by Amin Kanji, his wife Leila, brother Alnoor, sister-in-law Nafisa and Nazir Jinnah. The luxury property is located by the harbour, and consists of 96 apartments, eight penthouses and a 26-room hotel.

It is one of the few private projects granted the Vision 2030 Private Sector Flagship status.

According to court papers, KCB agreed to grant the firm loans between 2011 and 2018 and charged the English Point Marina.

The firm has been servicing the loan and enjoyed a moratorium that lapsed in June 2020. So far, the firm has paid Sh3.3 billion.

KCB took over English Point Marina after the bank tried several times to restructure the loan but the owners were still unable to meet the payments.

They placed it under receiver-manager, Kamal Bhatt, with expectations to sell part or all of the property with an aim of raising enough funds to settle the amounts owed to KCB. Other creditors would also get something once the bank’s claims are paid.

The owners however rushed to court to block KCB Group claiming there was no justification for the appointment of Mr Bhatt, because the parties have been engaged in negotiations.

The Real etstate lawyer Mr Nick Ndeda also pleaded with the court to allow the firm’s directors unfettered access to the Penthouses named D1 and D2, where they permanently reside.

The firm also sought to bar KCB from selling or subdividing any of the property or any part of the building or development and its assets, pending the determination of the application.

English Point Marina joins the high-value properties that have fallen in the hands of lenders after their developers defaulted.They include Nairobi’s DusitD2, which is currently claimed by I&M Bank, with other creditors seeking to take ownership of the property complex.

Banks have been compelled to place companies under receivership to deal with mounting bad loans. The ratio of gross non-performing loans (NPLs) to gross loans stood at 14.2 percent in August 2022 compared to 14 percent in February.

The Central Bank of Kenya (CBK) said increases in NPLs were noted in the building and construction, manufacturing, trade and transport and communication sectors. These increases were attributable to specific challenges in the respective businesses, and banks have continued to make provisions for the NPLs.

It has emerged that a few major customers, such as the developers of English Point Marina, are the main cause of the rise in defaults. The large clients borrow billions of shillings, meaning that default by a few of them can result in a major rise in the NPLs.

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