A retail firm has asked the High Court to stop New Kenya Co-operative Creameries (New KCC) from disposing of any of its assets while a Sh420 million contract dispute goes through arbitration. It says the dairy processor’s planned restructuring could leave it unable to recover the money.
Naipa Supermarkets Limited says it is not clear how creditors will be paid if New KCC changes its ownership structure. It is asking the court to keep the company’s assets intact until the arbitration ends.
The court has ordered both sides to maintain the status quo while it considers the application. It directed Naipa to serve New KCC with the papers by the close of business on October 14, 2026. New KCC then has seven days to file its response, and both parties will appear for a full hearing on October 22.
Naipa’s lawyer, Phillip Nyachoti, told the court that without its intervention, New KCC’s assets could be transferred before the arbitration ends, potentially leaving his client without an effective remedy.
“Unless the urgent preservation and protective orders sought herein are granted, the impending privatization, restructuring, disposal and transfer of the respondent’s assets may be concluded before the completion of the pending arbitration proceedings, thereby occasioning substantial irreparable financial prejudice to the applicant,” Nyachoti argued.
He wants the court to order New KCC to provide a Sh420 million bank guarantee within 14 days. Alternatively, the company could deposit the amount in an interest-earning account to protect Naipa’s interests.
In its application, Naipa also wants New KCC, its agents and its banks barred from selling, leasing or charging its factories, machinery, vehicles and equipment, or withdrawing or transferring funds from its bank accounts. If New KCC fails to provide the security, the supermarket wants the processor’s factories, land and fixed assets attached until any arbitral award is issued and enforced.
The case was prompted by President William Ruto’s announcements at the Agriculture and Food Systems Transformation Summit 2026, held at the Jamhuri Park ASK Showground in Nairobi from October 7 to 9. Speaking at the summit, the President said the government would settle the Sh8 billion owed by New KCC so that the company could better serve dairy farmers.
He also directed an immediate structural overhaul and modernisation of the processor, along with a reorganisation of its operational and payment systems. The debt settlement is to be funded through a supplementary budget.
Naipa argues that these reforms could affect the very assets against which it hopes to recover the money owed to it. “The Executive directions signal an imminent and far-reaching restructuring of the respondent’s financial affairs and operational framework and asset base, giving rise to a reasonable apprehension that its assets, including the milk processing factories, plant and machinery, immovable properties and its funds held in bank accounts, may be transferred or alienated,” Nyachoti said.
In a supporting affidavit, Naipa’s managing director, Anthony Munene, said the two companies signed a distribution agreement on January 1, 2022, which required any dispute between them to be referred to arbitration.
He said he feared the planned changes at New KCC would undermine his company’s case before the arbitral tribunal. The arbitration began after court directions issued on December 1, 2025, and hearings are set for November 5 and 18, 2026.
The dispute centres on a contract to supply processed milk, milk powder and ghee to Kapenguria, Lodwar, Lokichogio and other towns along the Kenya–South Sudan border. The government’s plans for New KCC are part of a wider drive to strengthen the dairy sector.
At the summit, President Ruto said Kenya had raised annual milk production from about 4.5 billion litres to 5.6 billion litres. He added that farm-gate prices had risen from Sh35 a litre four years ago to Sh50 a litre and are expected to reach Sh60 a litre.
