High Court Judge Alfred Mabeya directed a pan-African bank can auction a Ksh2 billion property located along Industrial area, Nairobi County to recover a loan advanced by the bank to the retailer.
Reports indicate that Shah had used his company, Collogne investments, to secure loans worth billions from various banks with an aim to save the supermarket from financial woes.
The judge also ordered the pan-African bank to issue a notice to other lenders before carrying out the auction process. He argued that the bank was free to auction the property since Nakumatt and Collogne investments had admitted to defaulting on the loan.
“For avoidance of doubt, no new notice of sale ought to be issued since all the other parties including Nakumatt and Collogne investments have acknowledged receipt of the same.
“All the bank has to do is to serve the other lenders with the said notice,” ruled judge Mbeya.
However, previous court orders showed that another local bank had been given the green light to carry out the auction. Past reports indicate that the bank had already entered into a sale deal for the property to a third party for Ksh1.04 billion making a loss of Ksh1 billion.
The speedy auction is believed to be in fear that rival lenders would appeal the process and hence lay claim on the asset.
Judge Mabeya on November 2020, had ordered the first bank to auction the property after Shah withdrew a case he had filed to save the property.
The besieged billionaire had gone to court to appeal the sale arguing that if the intended sale proceeded, other lenders would pursue their unrepaid loans.
Shah’s woes came into light after Nakumatt closed its doors in January 2020 with debt topping Ksh30 billion, Ksh18 billion of which were owed to suppliers with commercial institutions and banks demanding the balance of the debt.
The supermarket is said to have secured the loans between 2013 and 2015 after it fell into financial woes.