Bid to dissolve Mumias Sugar over debts escalates

Friday June 07 2019

An image of Mumias Sugar Company in Kakamega County taken on September 13, 2018. The company has collapsed. PHOTO | FILE | NATION MEDIA GROUP


Mumias Sugar Company got into more trouble as five more creditors joined a petition seeking to wind up the miller for failure to pay its debts.

The five joined the case on Thursday, bringing the number of creditors who are pursuing the dissolution of the once-vibrant sugar miller to more than 50.

Lawyer Jackline Kimeto sought to wind up the troubled sugar miller over a debt of Sh76 million. Ms Kimeto is demanding her dues for representing the company since 2015.

Some 43 others sued as a group, accusing the company of failing to pay them a total of Sh57.5 million.

Other creditors are Osho Chemicals, Milicons Ltd and Proparco, one of the largest secured creditors and who financed the construction of the power plant at MSC.

The Kakamega County government, which has put together a committee to oversee the planned revival of the company, and a law firm — Wekesa Simiyu — have also joined the case.



In court documents, Ms Kimeto argues that she represented Mumias Sugar in various cases and provided legal opinions as agreed between them. Whereas she did her job, the management is yet to honour its part of the bargain.

She said her law firm and the sugar company entered an agreement to provide legal services on April 22, 2015 as well as render advisory work, of which she sent fee notes. These have been taxed and judgment has been entered for the amount.

She filed the case arguing that the board of directors and the management seems to be unable to turn around the affairs of the company and make it meet its obligations to its creditors, as well as to properly account for the proceeds from the operations of the company.

“It is quite clear that in spite of the numerous written communications, the company has and continues to incur liability; that it is insolvent and unable to pay its debts as they fall due or can only pay if compelled by orders of the court,” reads part of the application filed in court.


In reply, the company claims to have paid the debt and that they were not aware of the petition.

Ms Kimeto said in the court documents that although the current management had promised to turn around the firm, this has become an almost impossible task.

The lawyer further accused the company of issuing several unpaid cheques and the fact that the company did not open for some time, making it more uncertain as to whether it can manage to pay its dues.

“I am aware that the company has not been operational for a period of over one year. The factory has shut down and its sugarcane is rotting in its nucleus estates,” she said.

Mumias Sugar, through company secretary Lynnette Okiro, said that being a listed company, fiscal decisions, especially the ones that affect budget, must be approved by the board.


She said the suit was brought with the sole aim of embarrassing the company.

“Therefore, the mere fact of no-payment of an advocate’s invoice for alleged services rendered or even the returning of an entity’s cheques dishonoured, which claim are in any event denied, does not and in itself give rise to a presumption that an entity is unable to pay its debts when they fall due,” she said.

In the petition, Ms Kimeto pointed out that the company has been plagued by extremely high management and staff turnover, with bosses being fired less than a year after being hired, for the last five years.

Justice Mary Kasango fixed the hearing of the case for July 23.