Kambi faces a bankrupcy suit over Sh300m debt

Suspended Labour Cabinet Secretary Kazungu Kambi speaks to journalists in a past press conference. PHOTO | FILE |

What you need to know:

  • Development Bank of Kenya moved to court after Riva Oils directors declined to settle the outstanding loan secured in 2007

Suspended Labour Cabinet Secretary Kazungu Kambi is embroiled in a legal tussle with a bank that is claiming more than Sh304 million from him.
Development Bank of Kenya has threatened to institute bankruptcy proceedings against him if he fails to pay Sh304,906,835.40 together with interests that accrued at a rate of 17 per cent per annum since February 28, 2010.

This is in relation to a ruling delivered on June 19, 2013, by Justice Jonathan Havelock in an application where the bank sought and was granted a summary judgment against Riva Oils Company’s Ezekiel Karisa and David Komen.

Mr Kambi has said that according to the ruling, the judgment was entered against Mr Karisa and Mr Komen respectively, jointly and severally in the sum of Sh304,906,835.40 together with interests at 17 per cent per annum from February 28, 2010 until payment in full.

“The said judgment is of no legal effect whatsoever upon me being the third defendant in that said suit,” Mr Kambi said in his court papers.

He said that his lawyers wrote a letter to the bank dated March 17, 2015, setting out the correct position in the matter so as to avoid confusion but, the bank proceeded to file a bankruptcy notice and served the same upon his secretary.

The bank had in a letter directed to the Cabinet Secretary stated: “Take notice that should you fail to pay the said sum of Sh304,906,835.40 together with interests as stated thereof, within the next 14 days, we shall proceed to institute bankruptcy proceedings against yourself without further notice of reference and at your own detriment as to costs and other attendant consequences thereto”.

Mr Kambi has, however, said that the bankruptcy notice is gravely misplaced, grossly misconceived and an abuse of the court process and should therefore be struck out.

Development Bank of Kenya moved to court after Riva Oils directors declined to settle the outstanding loan secured in 2007, by a charge over a parcel of land in Kilifi and personal guarantees by Mr Kambi, Mr Karisa and Mr Komen.

Before moving to court, the bank said it had notified the company’s directors of the default in servicing the loan and written a demand letter but no payment was made.

Riva Oils was suddenly closed down, leaving the bank without any option but to demand the outstanding amount from the guarantors.