Suraya insolvency suit adds to property developer’s woes
Suraya Property Group is on the brink of rout that may potentially lead to restructuring of the firm’s debt obligations or the liquidation of its assets to repay creditors.
This is after an insolvency petition was lodged at the Commercial and Admiralty Division of the High Court of Kenya in Nairobi by creditor William Kung’u Kinyanjui against debtor Peter Kiarie Muraya, owner of the real estate company.
Scheduled for mention on May 6, 2024, the petition signals a critical point in Suraya’s financial turmoil, prompting all creditors of Muraya to take heed and consider necessary action or filing an intention to be heard on the matter.
“The petition will be mentioned on 6th May 2024 at 9.00 am or so soon thereafter when directions on the hearing of the petition will be taken. Take further notice that any creditor or other person intending to be heard on the petition must file an intention to do so and serve the petitioners on the address provided here in below,” the notice stated in part. This step is pivotal in the insolvency process, offering creditors the opportunity to claim any outstanding debts.
Suraya Property Group has been grappling with financial difficulties since 2019. Allegations suggest the company collected at least Sh1.5 billion in down payments from local investors, hinting at a substantial portion of its debt being unsecured.
In a recent development, the High Court permitted Transnational Bank to auction a one-acre plot on Kiambu Road, intended for housing, to recoup a Sh111.2 million debt. This underscores that some of Suraya’s debt is secured by its real estate assets.
Adding to Suraya’s financial woes, the High Court overturned a Tax Appeals Tribunal ruling absolving Muga Developers Ltd, linked to Suraya, from a Sh3.5 billion tax liability assessed by Kenya Revenue Authority (KRA).
Repay creditors
In an insolvency case, the debtor either restructures obligations to continue operations and repay creditors over time or liquidates assets to repay creditors, with secured creditors typically paid first.
In its prime, Suraya, led by the dynamic duo of Peter and Susan Muraya, offered unbeatable deals, particularly to low-income clients. Peter, a University of Nairobi architectural graduate, and Susan, an experienced fashion designer behind Kenya Fashion Week, are the brains behind Suraya Properties. They quickly became one of Kenya’s most advertised off-plan developers. Suraya introduced the concept of off-plan housing, allowing potential homeowners to pay deposits based on house plans and artistic renderings, with the developer overseeing construction to completion as payments continued.
However, a series of setbacks led to Suraya’s downfall. The collapse of Chase and Imperial banks, significant players in real estate investments, dealt severe blows. Allegations of collecting Sh1.5 billion in down payments from local investors led to legal battles, with the High Court authorizing the auctioning of houses purchased by fourteen buyers from Suraya.
These financial challenges severely impacted Suraya’s operations and reputation. Once highly advertised, Suraya has struggled to fulfill commitments, raising doubts about its capabilities and tarnishing its reputation with allegations of fraud and poor financial planning. The company’s ongoing projects, including Fourways Junction, are embroiled in court cases, highlighting its financial strain.
