By Correspondent
The Court of Appeal has granted NCBA Bank Kenya PLC a reprieve in its bitter battle with debt-ridden transporter Multiple Hauliers E.A. Limited, halting the implementation of a High Court order that had handed control of the company’s restructuring to the Official Receiver.
A three-judge bench of Justices Gatembu Kairu, Fatuma Ochieng and Asike Muchelule on Friday ruled that NCBA had demonstrated arguable grounds in its appeal against Justice Alfred Mabeya’s decision of September 13, 2024, which shielded Multiple Hauliers from creditors while approving a proposed takeover deal with Amava Consortium.
Justice Mabeya had extended interim protection orders barring creditors from pursuing the company and directed the Official Receiver to supervise the completion of a “Term Sheet” transaction between Multiple Hauliers and Amava. The deal, expected to be finalized by December 2024, was touted as a lifeline for the struggling logistics firm.
The ruling angered NCBA, which is owed more than KSh7.2 billion, and which argued that its statutory right to appoint administrators had been ignored. The lender contended that by leaving Multiple Hauliers’ directors in effective control of the company, the High Court had put creditors at risk of massive losses as the value of the firm’s assets continued to deteriorate.
In its appeal, NCBA faulted the judge for appointing the Official Receiver without a formal application, noting that its own administrators had earlier resigned but no move was made to replace them. The bank said the order stripped it of its rights as a secured creditor and left it “handicapped” in recovering its loan.
The Court of Appeal agreed, holding that the question of whether the High Court had jurisdiction to appoint the Official Receiver without application was a serious legal issue.
“Whether in the absence of an application, the learned Judge had the jurisdiction to appoint the Official Receiver as the administrator of the respondent is an arguable point,” the judges said.
They further found that allowing the High Court orders to stand risked rendering NCBA’s appeal nugatory, as the “limited administration” envisaged by Justice Mabeya did not adequately preserve the company’s assets.
“We agree with the applicant that this limited administration did not preserve the assets and accounts of the respondent to ensure the right of the applicant to recover its loan,” the ruling stated.
The bench therefore ordered a stay of Justice Mabeya’s ruling pending the full hearing of the appeal, noting that the risk of irreparable harm to NCBA outweighed the arguments for maintaining the status quo. Costs will be decided at the conclusion of the case.
Multiple Hauliers, one of East Africa’s largest transport companies, has been under financial strain for years, with debts running into billions of shillings owed to several banks including KCB, Cooperative Bank and I&M Bank. Efforts to inject new capital through investors have collapsed three times, raising questions over the viability of the company’s turnaround plans.
The Amava Consortium was the latest prospective investor, with the company’s directors arguing that the deal could revive operations and safeguard creditors’ interests. But with the appellate stay now in place, the future of the transaction and the company’s broader restructuring efforts remain uncertain.