This archive report was first published on 21 August 2020.
On August 21, 2020, a court case revealed that former Nakumatt CEO Atul Shah used a property to secure loans from multiple lenders, putting the security of some banks at risk.
Bank of Africa won the claim to the Sh2 billion property in court and will auction the asset on August 24 to recover Sh700 million advanced to the collapsed retailer.
However, evidence presented in court indicates that the property was used as security to tap loans from other banks, leaving some lenders with worthless security.
Atul Shah used his company Collogne Investments, which owned the Sh2 billion property in Nairobi, as the guarantor to the multiple bank loans.
This ensured that the banks did not hold the property title as security because the main charge to the loans was the collapsed retailer.
Some banks will lose the security once Bank of Africa auctions the property, according to court documents.
Nakumatt closed shop in January with debts estimated at Sh30 billion, including Sh18 billion to suppliers, Sh4 billion to commercial paper holders, and the rest to banks.
Regulatory filings indicate that Nakumatt owed DTB Bank Sh3.6 billion, Standard Chartered Sh900 million, KCB Sh1.9 billion, Bank of Africa Sh328 million, UBA Sh126 million, and GT Bank Sh104 million.
