The Karen estate of former Minister Raphael Tuju went into receivership on Tuesday due to a debt of 2.2 billion shillings under the old law that favors auctioning of assets instead of a rescue plan.
The East African Development Bank (EADB) has appointed PricewaterhouseCoopers (PwC) consulting firm to be the escrow manager for the 20-acre area and the high-rise hotel, which Tuju estimated at 3.5 billion shillings.
The hotel is currently under the management of Tamarind.
The action comes a few days after the Court of Appeal dismissed Mr Tuju’s request to oppose the enforcement of the UK debt decision, thus giving the property the opportunity to be auctioned.
Under the bankruptcy law that came into effect in January 2016, a creditor is required to bail out a debt-ridden company before selling its assets at auction, providing a way to bail out debtors.
But the loan agreement signed in the UK between Dari Ltd and EADB was agreed on April 10, 2015, before the bankruptcy law was passed, removing the shield that would have helped Mr Tuju avoid the auction.
The local lender has announced the appointment of Muniu Thoithi and George Weru of PWC as escrow managers.
“Any person purporting to hold, receive, use or attempt to buy or sell, enter or transact or otherwise deal with the business and property of the Company without the written consent of the Recipients shall do so at their own risk,” the notice said.
EADB, which is part owned by the Kenyan government, has entered into a four-year legal dispute with the former general secretary of the Jubilee party regarding the implementation of the British judgment that ordered the confiscation of Mr Tuju’s assets under the Dari Limited sales company.
Mr Tuju unsuccessfully fought the enforcement judgment in the Court of Appeal, arguing that EADB was hampering efforts to get other creditors, including the KCB Group and equity investors, to recover the profitable assets.
The Court of Appeal judges said Mr Tuju and EADB had voluntarily chosen to submit to English law and the judgment could not be overturned simply on the basis that it was wrong.
Mr Tuju, who served as a minister in the former administration of Mwai Kibaki and Uhuru Kenyatta, was a prominent member of opposition leader Raila Odinga’s presidential campaign in the race won by President William Ruto last year.