Mumias Sugar lease saga: Law firm now wants KCB administrator removed

Wednesday, February 2nd, 2022 12:39 | By
Mumias Sugar staff want Sarrai Group out
Mumias Sugar revival. Photo/Courtesy

The fight for control of Mumias Sugar Company has continued to escalate after a law firm filed a petition seeking the removal of KCB administrator Ponangipalli Venkata Ramana Rao as the head of the company.

M/S Kimeto and Associates Advocates wants the court to revoke the appointment of Rao as the administrator of Mumias Sugar Company saying his conduct as the administrator has demonstrated a complete lack of integrity and competence in undertaking the company's leasing process.

“He has shown a serious conflict of interest and complete lack of fidelity in adhering to the mandatory provisions of the law in dealings with creditors,” the law firm claims in court documents.

The law firm is one of the petitioners in the insolvency proceedings against Mumias Company, having filed a liquidation petition dated March 20, 2019 over Ksh76 million debt.

Pursuant to their application, and on its motion, the court appointed Rao as an administrator of the Mumias Sugar company on November 19, 2021.

Several applications have since been filed in court regarding the lease of the sugar milling plant and in December last year, the court suspended leases that were issued to Sarrai and Rai Group and stopped them from going on with works at the factory. Sarrai on the other hand has filed an application seeking to have the order suspending the lease lifted.

The law firm, on the other hand, wants the court to nullify the tender for the leasing of Mumias Sugar. It now wants the court to order a fresh tender process which will be undertaken by the official receiver in consultation with a creditors committee appointed by the court.

Kimeto Advocates also want the court to appoint in an interim capacity the official receiver as interim administrator for purposes of convening an initial creditors meeting to review existing proposals and viability of revival of the company.

The law firm accuses Rao of failing and refusing to operationalize the administration process as per the law and the court's direction.

It now wants the court to order a forensic audit of Rao’s receivership accounts dated June 29, 2020, November 10, 2020, and November 12, 2021.

It argues that Rao had filed a sworn statement on receivership accounts of Ksh1.5 billion, an amount that can pay off KCB's debt with the firm.

“The proposed leasing of the Mumias Sugar Company has altogether collapsed with the administrator currently engaged in vicious legal suits all over the country with disgruntled bidders who responded to the call for the leasing of the company by a qualified investor,” Kimeto Advocates argued.

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