A bid by businesswoman Mary Wambui Mungai to regain control of Glee Hotel suffered a setback after the High Court allowed an administration process initiated by Equity Bank to continue.
In a ruling delivered on Thursday, Justice Freda Mugambi found that the hotel had failed to provide sufficient grounds for the court to suspend the administrator’s mandate pending the hearing of the dispute over the debt.
Justice Mugambi noted that the hotel had not disputed owing money to the bank and had failed to demonstrate that the administrator’s involvement had adversely affected its day-to-day operations.
She also found that the Sh400 million the hotel proposed to deposit in court was far below the amount claimed by Equity Bank and could not serve as adequate security pending the determination of the case.
“All these factors taken together favour not granting any interim orders at this point. The administrator is an officer of the court, and should it become clear that there is need for intervention, there are mechanisms under the Insolvency Act to do so,” Justice Mugambi said.
The judge ruled that there was no basis to halt the administration, finding that the process was being conducted within the law and that there was no evidence of misconduct by the administrator.
Lawyer Emmanuel Mumia, representing the hotel, argued that the administration had already damaged the hotel’s reputation, with negative publicity unsettling clients and affecting business prospects.
He said the hotel remained committed to settling the debt and intended to clear the outstanding balance after depositing the proposed security.
“We have demonstrated how the hotel is negatively affected commercially even by mere storyline in the media,” Mumia said.
Equity Bank opposed the application, arguing that the outstanding debt had risen to about Sh9.1 billion as of July 3.
Through Senior Counsel Kiragu Kimani, the lender argued that the proposed deposit represented only a small fraction of the amount owed and accused the borrower of failing to honour an earlier settlement agreement.
The bank also rejected claims that the administrator had interfered with hotel operations, maintaining that the insolvency process was being conducted in accordance with the law.
The dispute arose from a consent agreement reached in February, under which Equity Bank agreed to accept Sh7.75 billion as full settlement of the debt owed by Wambui and related entities within an agreed period.
The agreement collapsed after the repayment deadline lapsed, prompting the lender to place Glee Hotel under administration.
The matter will now proceed with parties directed to file submissions on pending preliminary objections before the substantive hearing.
– By Reagan Oluoch
