Law firm’s appeal for Mumias Sugar Fresh’s bidding process is justified

Law firm’s appeal for Mumias Sugar Fresh’s bidding process is justified

By Korir Isaac / Posted on February 3, 2022 | 1:21 p.m.

KEY POINTS

Sarrai Group has no history of sugar production in Kenya. This is a new company whose financial viability and technical capacity have no record in Kenya.

Entrance to Mumias Sugar Company.

KEY POINTS TO REMEMBER

The Mumias Sugar Company lease project has completely collapsed with the administrator currently engaged in vicious lawsuits across the country with disgruntled bidders who answered the call for the company to be leased by an accredited investor. .

A motion has been filed in court to remove the receiver-manager of Mumias Sugar Company, Ponangipalli Venkata Ramana Rao, following the controversial bidding process that led to the company’s assets being awarded to Sarrai Group.

According to M/S Kimeto and Associates Advocates, the appointment of KCB administrator Rao should be revoked on the grounds that his conduct as administrator of the sugar mill depicts an absolute lack of integrity and competence in the conduct of the bidding process.

“He demonstrated a serious conflict of interest and a complete lack of fidelity in respecting the mandatory provisions of the law in dealing with creditors,” the law firm claims in court documents.

M/S Kimeto and Associates Advocates had previously, on March 20, 2019, filed for liquidation and is involved in the insolvency proceedings against Mumias Sugar Company.

Following this request, the court appointed Rao as administrator of the Mumias Sugar Company on November 19, 2021.

Since then, a plethora of other claims have been filed in court regarding the sugar mill lease.

In December 2021, Sarrai Group, the lowest bidder in the rental process that won the – controversial – tender began work on the sugar mill. However, the court barred the receiver-manager from pursuing the tenancy until the case filed by Tumaz and Tumaz was decided.

In its conclusions, Tumaz had asked the court to annul the decision of the receiver-manager awarding the contract to the Sarrai group. Sarrai, on the other hand, filed a motion to have the suspension order for his victory lifted.

The new petition from M/S Kimeto and Associates Advocates, on the other hand, asks the court to cancel the tender for the rental of Mumias.

Kimeto Advocates, with the assistance of the court, is requesting a new bidding process conducted by the official receiver in consultation with a court-appointed creditors’ committee.

According to the law firm, the court should appoint the official receiver as interim administrator on an interim basis to convene an initial meeting of creditors to review existing proposals and the viability of reviving the business.

She justified this position by noting that the receiver-manager failed and refused to operationalize the administrative process in accordance with the law and the directions of the court.

As such, Kimeto Advocates also wants the court to issue a forensic audit order of Rao’s receivership accounts dated June 29, 2020, November 10, 2020 and November 12, 2021.

The law firm argues that the 1.5 billion shillings presented in an affidavit on the receivership accounts is sufficient to repay KCB’s debt to the firm.

“The Mumias Sugar Company lease project has completely collapsed with the administrator currently embroiled in vicious lawsuits across the country with disgruntled bidders who answered the call for the company to be leased by an investor qualified,” said Kimeto Advocates.

The decision to file a motion by the law firm is not without merit. In retrospect, the receiver-manager failed in his duties and hastily awarded the Sarrai Group 100% of the points without doing due diligence.

Sarrai Group has no history of sugar production in Kenya. This is a new company whose financial viability and technical capacity have no record in Kenya. Worse still, he has been prosecuted and has ongoing cases relating to the eviction of families and displacement of people from their homes for the cultivation of sugar cane in Uganda.

As receiver-manager, Ponangipalli Venkata Ramana Rao failed and the value and trust of the public, especially farmers, shareholders and creditors placed in him as administrator.

It handed over Mumias without the approval of the Competition Authority (CAK) as required by law in accordance with its tender guidelines. The calculation of the dominant position falls to the Autorité de la concurrence and not to the receiver.

It is therefore true to say that Kimeto Advocate’s request for a new tendering process is justified – and this time it should be done openly and competitively. In this way, the Mumias Sugar factory will be quickly revived and its crippling debts will be settled as soon as possible.

About Korir Isaac

A creative, tenacious and passionate journalist with impeccable ethics and a flair for anticipated and spontaneous news. He might not say it, but he sure can make quite a fuss.

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