This archive report was first published on 21 August 2020.
Published on August 21, 2020, a court case has revealed a complex web of loans secured by former Nakumatt CEO Atul Shah.
Shah used a Sh2 billion property in Nairobi as collateral for loans from multiple banks, including Bank of Africa, which has won the right to auction the asset to recover Sh700 million.
However, evidence suggests that the property was also used as security for loans from other banks, leaving some creditors at risk of losing their security.
“The charged property is also charged to other banks and if the plaintiff does sell the same all other creditors stand a chance of losing their security and that the defendant bank is well secured by the charge over the charged property,” Mr Shah said in court papers.
Shah's company, Collogne Investments, owned the Sh2 billion property, which was used as a guarantor for the multiple bank loans.
This ensured that the banks did not hold the property title as security, as the main charge to the loans was the collapsed retailer, Nakumatt.
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.
The court was not told the specific banks that could lay claim to the Sh2 billion property, but 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.
