The High Court has blocked KCB Bank from placing cereals manufacturer Proctor & Allan Limited under receivership over a debt dispute amounting to Sh4.9 billion. Justice Njoki Mwangi issued temporary orders restraining the bank from appointing receiver managers, citing procedural irregularities in the process.
The dispute dates back to 2013 when Proctor & Allan secured a Sh1,676,500,000 loan from KCB. The company has since repaid Sh506,000,000 in interest and penalties while continuing to service the facility. However, on February 21, 2025, KCB issued a demand for immediate payment of Sh4,918,591,477, covering the outstanding loan, accrued interest, and associated charges. Three days later, the bank appointed Swaroop Rao Ponangipalli and Ponangipalli Venkata Ramana Rao as receiver managers to take over the company’s operations.
In response, Proctor & Allan moved to court, arguing that the bank acted unlawfully by failing to provide adequate notice before appointing the receiver managers. The firm sought legal intervention to prevent the takeover while resolving the loan issue. The court granted an injunction on February 28, allowing the company’s directors unrestricted access to its assets, bank accounts, security keys, and business documents.
Proctor & Allan asserts that it had an agreement with KCB to settle Sh1 billion by December 2024 but encountered delays due to challenges faced by its investors. The firm informed the bank of an investor’s offer of Sh1.25 billion, subject to due diligence, in June 2024. KCB initially acknowledged the investor’s interest and granted a 30-day extension for completion. However, on January 24, 2025, the bank demanded full repayment of Sh1 billion by January 31, 2025.
Proctor argues that it had consistently updated KCB on the investor’s progress and alternative funding options. Despite this, the bank escalated its demand, leading to the receivership attempt.
With the court intervention, the receivership is on hold pending further proceedings. The case is set for mention on March 13, 2025, to determine the next course of action.
