The investor behind Mombasa-based English Point Marina is now seeking clarity after the takeover of the facility by a receiver manager, amid a protracted court battle that is threatening to sink the multi-billion project .
This is after KCB Group seized the facility, for a second time, over a Sh5.2 billion debt last year.
A back and forth court battle has placed the Mombasa luxury property in the hands of receiver-manager, Kamal Anatroy Bhatt, amid protests by the developer and owners.
Court documents filed by KCB show that Pearl Beach Hotel borrowed a total of Sh5.2 billion between 2010 to 2016 for the construction of the fully serviced 5-Star facility, located on mainland Mombasa.
The loans were advanced in the form of a development finance facility, which would be sold to offset the debt.
While the hotel was completed in 2017, the developer was unable to service the loan, KCB says, with numerous restructuring agreements, moratoriums and other accommodations provided to Pearl Beach Hotel, which owns the hotel, failing to bear fruits.
The luxury property is located by the harbour, in high end Nyali overlooking Fort Jesus and the Indian Ocean.
The owners have been left at cross-roads over court rulings, with KCB determined to take over the facility and related properties, majority being prime businesses and assets at both Mombasa and Diani.
This, amid alleged threats on the directors by the receiver manager, including an alleged “shoot to kill” order on the owners.
An earlier ruling last year had forbidden KCB from appointing any receiver, manager, or administrator based on specified past agreements, until the case is fully resolved.
According to the investors, orders issued on May 29, 2023, had continued to bring confusion on whether in effect, KCB ought to have appointed a receiver manager.
Marina's lawyer Maloba Anangwe said the orders issued by High Court Judge Dola Chepkwony were still in place at the time KCB was taking over the hotel.
The hotel accused KCB of misinterpreting court orders that had been earlier issued as it appointed a receiver manager.
“Despite this Honourable Court’s intention that the Applicant operate as a going concern pending the determination of its application, the Respondents have contemptuously circumvented this court’s orders by deliberately misinterpreting and misrepresenting the Orders of the Honourable Court of Appeal,” court papers read in part.
The takeover, the hotel says, directly crippled operations at a time the economic environment was already challenging, with political uncertainty which came after the elections slowing down business in the tourism and hospitality industry.
“The applicant has been forced to incur a higher cost of doing business in order to maintain its operations in light of its restricted liquidity thereby demonstrating the Respondents’ bad faith and lack of intent in complying with the orders of the Honourable Court,” the hotel through its lawyers noted in court filings.
In its appeal, KCB argued the judge erred by issuing the orders.
Marina filed an urgent application before the commercial court, arguing that the bank had irregularly seized the property without due process.
The lawyer had written to the Chief Justice to complain about delays in the case, calling for a speedy process and resolution.
On November 7, 2022, CJ Martha Koome’s office responded saying she had noted that the matters in contention was alive in the High Court and Court of Appeal.
“Chief Justice has no constitutional or administrative authority to intervene in a matter pending in Court or at the Judicial Service Commission,” said senior legal counsel in the office, Muciimi Mbaka.
Despite court orders, the hotel remained firm saying KCB and its receiver manager attempted to undermine the character of Lady Justice Chepkwony, filing complaints against her with the Judicial Service Commission in addition to filing a simultaneous application seeking the Judge’s recusal.
The Court of Appeal halted any further proceedings of receivership from October 4, 2022.
However, the respondents (KCB and its receiver) assumed receivership, deliberately, the hotel said, "ignoring the court of Appeal's directives, thus endangering Pearl Beach Hotel's operations and rights protected under the Constitution of Kenya.”
“The Bank and receiver trespassed onto the hotel's premises, terminated employees, and acted against prior court orders, further engaging in disputes and causing significant financial harm to the hotel,” management said.
Despite Pearl Beach Hotel's attempts to seek clarification on certain rulings, the Court of Appeal did not provide clarity, it argued, allowing the bank to interpret orders to its advantage.
KCB imposed harsh restrictions, barring directors from their residences, leading to the tragic death of a 93-year-old family member due to their denied care and visitation, court papers indicate.
“Over the Christmas period in 2022, KCB violated laws by evicting the deceased's properties and breaking into directors' residences, causing damage and potential theft,” it said.
The takeover has also thrown suppliers into disarray as they face payment delays, while the hotel suffers from revenue losses, misuse of resources, and pilferage, all under the guise of KCB and its agents, raising concerns over potential conflicts of interest.
The damage to the developer’s reputation is already irreversible, lawyers have argued, incomprehensible and not compensable by way of damages, owing to the fact that KCB and its receiver manager continue to pillage his assets and hamper its ability to conduct business operations.
English Point Marina is owned by Amin Kanji, his wife Leila, brother Alnoor, sister-in-law Nafisa and Nazir Jinnah.
According to Kanji, he floated the idea to many banks who showed interest but most wanted to form consortiums with other banks due to the magnitude of the project.
KCB however indicated they had the capacity and appetite to go it alone.
The project had 96 luxury apartments, eight penthouses, three poolside apartments, 26-room hotel, five retail shops in the hotel, spa and gym.
It also had a boardwalk and five restaurants, conference and banquet hall in the sea, and the marina, and the marina center in the sea.
The business plan was to sell the requisite number of apartments to cover all costs, wit a target of pre-selling as many units as possible during the two-year construction period, and then the balance if any, up to two years after completion.
Construction started in October 2010 and completion was expected in December 2012.
In June 2012 to September 2012, KCB froze all the hotel’s accounts which stalled the project and dried up sales.
The lender appointed a forensic auditor to audit not just English Point but the KCB Treasury Square Branch in Mombasa.
During the period, it continued to levy interest on loan.
In October 2013 to May 2014, the bank stopped funding the project and asked the developer to look for an investor, whom it ended not approving.
The Court of Appeal froze High Court orders that blocked the lender’s appointed receiver-manager taking over the property without disclosing the reasons.
KCB first seized English Point Marina in June last year, sparking a court fight with the owners that saw the bank kicked out a month later.
The bank went back to court to fight the freeze and push for a takeover of the hotel, which now sets it on the verge of collapsing, amid a lengthy court fight and multiple suits on the property.
