The English Point Marina, a luxury property built by the harbors of Mombasa, found itself in a court dispute after failing to pay back a loan of Sh5.2 billion. The loan was granted by KCB to the Pearl Beach Hotel, the property’s owner, to complete its construction between 2011 and 2016.
Across the creek from historic Fort Jesus and the breathtaking view of Mombasa’s ancient city is the luxurious English Point Marina on a 4-acre beachfront site. The contemporary hotel was developed by Broadway Malyan Architects to be a higher-end residential for locals and tourists from across the world, as well as a marina and other leisure facilities.
The luxury property has 96 apartments, 8 penthouses, and a 26-room hotel. It is one of the few private initiatives to earn the Vision 2030 Private Sector Flagship standing. The property is owned by Amin Kanji, Leila Kanji, Alnoor Kanji, Nafisa and Nazir Jinnah.
KCB Loan Guarantors
The Business Daily reports that the owners of the company offered themselves as guarantors for a loan of Sh5.2 billion. Each owner personally guaranteed up to Sh1 billion in case of a default. This was revealed from the court papers that showed the directors used the facilities’ assets, rental incomes, private estate, and personal and corporate guarantees to help secure it.
KCB’s court filings reveal that between 2010 and 2016, the company borrowed Sh5.2 billion to build a completely serviced 5-Star English Point Marina at Pearl Beach Hotel. The loans were made in the form of a development finance facility, which would be sold to recoup the debt.
The hotel was opened in 2017 and, according to KCB, the developer was unable to repay the loan on several occasions. Thirty apartment units and four penthouses had already been purchased by the time the property was launched. Mr Oraro added that despite several restructuring agreements, doldrums and other concessions made to Pearl Beach Hotel, the owners are yet to pay off their debt.
As of May 31, the arrears were Sh1.7 billion. Thus, KCB assigned Kamal Anatroy Bhatt to manage the hotel and recoup the whole amount, including the original sum and interest, which he claims is Sh5.8 billion.
The court papers also revealed that the lender has only put the luxury property under receivership. But if the directors do not repay their loan, the lender may pursue their personal properties and $10 million indemnities.
KCB has since then accused the borrower of diverting cash from the sale of apartments to offset their debt. Meanwhile, the directors have worked to block KCB from seizing the property right under their noses by countering their suits.
According to George Oraro, Pearl Beach Hotel sent a letter to the lender on May 27, confirming that it was owed Sh3.1 billion and requested to make monthly instalments of Sh4.5 million to reimburse it. However, the guarantors have counteracted the claim by blaming KCB Group for allegedly overcharging them with over Sh893 million in loans given to the firm.
Nazir Jinnah, one of the directors, claims that they have attempted to resolve the firm’s loan repayment with the lender. He added that they have already settled Sh3.35B. Mr Jinnah declares that the firm has paid Sh3.35 billion.
Money Laundering in English Point Marina
In March 2022, Business Daily reported the money laundering and fraudulence claims that faced English Point Marina. The property owners are also in a bitter dispute with apartment purchasers that probed an investigation. The buyers claim they have been locked out of the houses they paid Sh.600 million for.
In February, Justice Mativo, a High Court judge, threw out a lawsuit filed against DCI by Pearl Beach Hotels to halt the investigation. His orders followed the filing of a group of 12 purchasers who sought compensation for being excluded from their apartments owing to disputed service bills. Furthermore, the staffers went on to disconnect electricity from some units despite setting the disputed service bills.
In the civil case, the purchasers are challenging English Point Marina’s decision to prohibit them from subletting their apartments. The developer has intentionally interfered with apartment owners’ security keys to force guests to opt for hotels. This is contrary to the prior agreement, where the two parties agreed that the developer would allow the buyer to sublet the apartment in return for 30% of the revenue.
The Directorate of Criminal Investigations (DCI) was permitted to continue with an investigation into Pearl Beach Hotels for fraudulent billing of apartment proprietors by Justice Mativo.
Discrimination Against Black Homeowners
According to the plaintiffs, the executives of English Point Marina ordered employees to discriminate against black African homeowners by enforcing harsh restrictions. This was allegedly done to bar them from entering the premises.
The court papers say that the developers made the apartment owners notify the management before their visit. In addition, the homeowners’ servants are also denied entry into the units to carry out their cleaning duties.
Some of the dissatisfied apartment owners are Rockefeller Foundation Africa director William Asiko, tycoon Booker Mbugua, Jubilee financier Sam Kairu, Susan Muigai, Joseph Wanjui, Kariuki Minju, Solomon Bundi, Resilient Investments, James Kinuthia, Silverline Investments, and Everywhere Investments.
A high court judge has permitted the Directorate of Criminal Investigations to continue investigating the developer for alleged fraud by billing apartment renters.
KCB Goes in For The Kill.
On 30th May, according to Business Daily, KCB took over English Point Marina. The bank appointed Mr Bhatt as their receiver-manager, according to the Insolvency Act of 2015. The luxury property joined DusitD2 on the list of high-end properties taken over by lenders.
This followed KCB’s several attempts to restructure their agreement, but the borrowers still defaulted on the loan. The receiver-manager was supposed to sell part of or the entire property to repay the bank for what was owed. In addition, other creditors also want a piece of the pie once KCB is done with it.
The firm immediately began auditing the buyers to determine whether they were fulfilling their obligations. However, the takeover did not impact those that have completed their purchase.
The takeover was also caused by the fallout between the developer and the purchasers, who alleged not receiving ownership of the houses they paid Sh.600 million for.
KCB Takeover is halted by Courts.
Business Daily reports that the takeover bid by the KCB has been halted by Justice Dora Chepkwony–a week after the seizure–, until the case filed by the developer is resolved.
The court granted a temporary injunction on the appointment of Bhatt as a receiver-manager, pending the resolution of a petition filed by Pearl Beach Hotels, which claims that his appointment is illegal. The firm argued that the move was unjustified since the two parties have been in discussions.
In a certificate of urgency filed by Pearl Beach Hotels, the builder claims it has been in talks with the lender to resolve the loan repayment, and KCB acknowledged an Sh893.7 million overcharge on its records.
Mr Jinnah said that the appointment of a receiver unexpectedly exposes the property’s assets to risks and will likely result in the loss of both the facility and the value of unsold units.
The developer’s lawyer, Mr Ndeda, asked the court for access to penthouses D1 and D2. This is where the Pearl Beach Hotel directors resided with their families. KCB had allegedly ousted the directors from their residential units on the premises and left them destitute, depriving them of their basic rights as guaranteed by the constitution.
The developer also requested that KCB be prevented from selling or dividing the property, or parts of it, and its assets until a decision on the petition is made. The lawyer added that the firm had been servicing the debt and had a suspension that expired in June 2020. However, he asserted that the company has settled Sh3.3 billion so far.
The court had then instructed the matter to be heard again on June 13, 2015, for further instructions.
The Court Freezes Pearl Beach Hotels Accounts
In a lawsuit filed by the lender, the company’s directors have been accused of moving money from several bank accounts in violation of their agreement.
According to Oscar Obuna, KCB’s head, the developers tried accessing money from DTB to place them beyond the reach of the appointed receiver at the expense of the bank. This was after EPM was placed under statutory management. In his remarks, Mr Obuna said that DTB had confirmed that the directors access the funds unless a court order prevents them.
The High Court proceeded to free Pearl Beach Hotel’s bank accounts, pending the adjudication of a complaint filed by KCB. KCB is also attempting to persuade the court to suspend the hearing that stops Mr Bhatt from taking control of English Point Marina.
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