Two Karuturi directors file suit against receivers over property

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Some of the buildings on the former Karuturi land. (Photo: NMG)
The Standard | October 31st 2020
 
Two Karuturi directors file suit against receivers over property
 
By Dominic Omondi 
 
Two directors of the bankrupt Karuturi flower farm have moved to court accusing the company’s creditors and receiver managers of destruction of property. 
 
Anitha Karuturi and Sai Ramakrishna Karuturi told the court that Stanbic Bank and ICICI Bank colluded with the three receiver managers to demolish a property the two had been using as a wildlife and bird-watching lodge.
 
The Masdam House, they said, was patronised by high-value visitors.
 
Following the demolition, the two claim to have lost invaluable items including, Persian carpets, jewelry, home ornaments and crockery valued at Sh34.2 million.
 
However, the court asked each of the applicants to first deposit a security of Sh10 million before the case continues.
 
Such security, the court said, may be in the form of a cash deposit in court or a joint account in the names of the respective advocates, or in the form of a bank guarantee from a reputable bank agreed upon by the parties.
 
“In default of compliance with the provisions of such security, the plaintiffs’ claim shall be struck out with costs to the defendants,” said High Court judge David Majanja in an October 23 judgment.
 
The order followed arguments by the five defendants in the case that due to the fact that the two were residents of India, they needed assurance that the applicants would pay the cost should they lose the case.
 
The defendants include the two creditors, Stanbic Bank and ICICI Bank, and receiver managers Ian Small, Kieran Day and KVS Kamasastry.
 
They denied demolishing the house, saying it was done on the orders of the Water Resources Management Authority.
 
Masdam House, they argued, was not owned by the plaintiffs but was part of the securities offered by the defaulting companies. 

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Business Daily | Sunday November 01 2020
 
Karuturi seeks Sh1.2bn from Stanbic for flattened hotel
By OTIATO GUGUYU
 
Summary
- Collapsed flower firm Karuturi owners want Stanbic Bank and receiver managers to pay them Sh1.2 billion for demolition of a hotel on the property.
- Anitha Karuturi and Sai Ramakrishna Karuturi have sued the bank and receiver managers for the demolition of Masdam House, which stood on Plot No. 9352/3 Naivasha.
- They argue the hotel was not part of the securities offered.
 
Collapsed flower firm Karuturi owners want Stanbic Bank and receiver managers to pay them Sh1.2 billion for demolition of a hotel on the property.
 
Anitha Karuturi and Sai Ramakrishna Karuturi have sued the bank and receiver managers for the demolition of Masdam House, which stood on Plot No. 9352/3 Naivasha. They argue the hotel was not part of the securities offered.
 
They want compensation for the 2015 demolition, noting that the hotel was utilized as a wildlife and bird watching lodge and was patronized by high profile and high value individuals. The owners cite invaluable arts, artefacts, Persian carpets, jewellery, home ornaments and crockery as among the material losses they suffered.
 
“The Plaintiffs (owners) claim of $614,536.75 which is slightly over Sh1,261,000,000.00 is not an insubstantial sum,”judge David Majanja said in court papers.
 
In their defence, Cfc Stanbic Bank Limited, ICICI Bank Limited, Ian Small, Kierian Day And Kolluri Ventaka Subbaraya Kamasastry said the hotel was located on riparian land and was brought down under instructions of the government.
 
They said the property which belonged to Karuturi and not the directors had been built on riparian land without necessary approvals prompting an order from Water Resources Management Authority (Warma) for its demolition.
 
“The issue of Masdam House having been erected on riparian land and having been constructed without Naivasha Municipal Council approval were raised. That in light of those proceedings there is sufficient evidence to support their contention that the demolition order was issued by Warma,” Justice Majanja said.
 
The two directors suffered a blow when the court ordered that they should each deposit Sh10 million to the three defendants meaning they would need to raise Sh60 million as security before proceeding with the case.
 
The security to be deposited in the next 60 days may be in the form of a cash in court custody or a joint account in the names of the respective advocates or in the form of a bank guarantee from a reputable bank agreed upon by the parties.
 
The defendants had successfully argued that the two directors were foreign nationals who reside in Bangalore, India and it would be in the interests of justice that they be ordered to furnish security for costs as they do not have any assets to attach if they lost the case.
 
Karuturi, was one of the world’s top growers of roses and whose exports topped a million stems every year, before it came crashing under the weight of debt.
 
It was put under receivership in 2014 after failing to service a Sh383 million loan from CfC Stanbic.
 
The firm’s debt has increased to Sh1.8 billion after factoring in the expense incurred by the bank to run the property during the receivership period.
 
The management of the flower farm Karuturi Limited in March 2018 announced it has secured an investor to inject funds into the business as they fight to save their prized asset from being auctioned.
 
Karuturi said then that it had reached an agreement with Phoenix Group for a “blend of debt and equity” that would help it to meet its current debt obligations and restart its operations.
 
However, in 2019 its owners through Surya Holdings and RHEA Holdings lost the flower farm to a Stanbic over a Sh1.8 billion loan that sparked a lengthy court fight to auction the property.
 
 
Original source: The Standard
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