Cereal maker, Proctor & Allan Limited, got a major reprieve after the High Court lifted orders placing it under receivership.

Justice Njoki Mwangi, in her orders, ordered receiver managers Swaroop Rao Ponangipalli and Ponangipalli Venkata Ramana Rao not to interfere with the company’s operations until the court issues further orders.

“An interim order is hereby issued holding in abeyance actions and appointments of the second and third respondents as receiver managers of the applicant pursuant to debenture dated November 1, 2013 and debenture dated October 28, 2015, between the applicant and the first respondent in respect to the applicant,” ruled Justice Njoki.

She directed that Proctor’s operations continue as before the Kenya Commercial Bank (KCB) appointed the two receiver managers.

KCB appointed Swaroop and Venkata following a Sh1 billion loan payment row between it and the firm.

Proctor & Allan is one of the oldest food processors. It was founded in the 1940s in Nakuru but later moved to Nairobi. In 1999, local investors and the Acacia Fund bought it from the Unga Group.

It is linked to billionaire Ngugi Kiuna, former East Africa Cables chair Zephaniah Mbugua and former Kengen boss Eddy Njoroge.

In its case filed under agency by Kasimbazi and Company Advocates, Proctor argued that on August 27, 2024, KCB accepted a Sh1 billion one-off payment to be paid by November 30, 2024.

The court heard that the amount was meant to be the last batch payment.

cording to Proctor’s lawyers, a strategic investor had agreed to inject USD10 million (around Sh125 million ), which was undergoing scrutiny.

“At all material times the applicant acted with utmost good faith and ensured that the 1st Respondent was well appraised of all developments in respect to securing the USD 10 million investment that would settle the outstanding debt,” the firm argued.

It asserted that the process was slow, adding that it had explained to KCB what was transpiring.

Nevertheless, Proctor said it received a letter on January 24, 2025, demanding that it should pay the full amount in seven days.

“In response via a letter dated January 27, 2025, the applicant fully disclosed and appraised the 1st Respondent of the reason for the slow progress of the transaction with their Investor which was at an advanced stage. Importantly, the applicant reiterated its cooperation to ensure that the transaction was successful, in this regard the applicant requested the first respondent for an extension of time on behalf of the investor to complete its financial programs,” argued Kisambazi.

The court heard that the investors were still willing to bail out the firm. In the meantime, Proctor said it had secured another investor willing to inject Sh800 million in a separate deal dated February 18, 2025.

However, it argued that the bank wrote three days later, demanding Sh4.7 billion, which included the principal loan, accrued interest and charges.
It then appointed the two receiver managers on February 24, 2025.

Proctor said the bank’s actions were unfair and in bad faith.

At the same time, the court heard that Swaroop and Venkata allegedly fired all of Proctor’s employees the following day without notifying them.

“The said unlawful and forceful takeover of the applicant by the second and third respondents has gravely prejudiced and destabilized the applicants’ operations and ability to continue as a going concern warranting the urgent intervention of this Honourable Court. Importantly, the said actions will also negate the ongoing acquisition transactions of the applicant which are intended to raise capital so as to liquidate the subject debt,” the judge heard.

According to Proctor, KCB is aware that it is in the process of having a Sh1.8 billion bailout. Nevertheless, it argued, the lender turned away to demand its pound of flesh.

Proctor’s director, Stephen Nthei, told the court that the firm received Sh1.6 billion loan from the bank in 2013 and paid more than Sh506 million in interest and penalties.

According to Proctor, the initial agreement was that it would surrender its current and future assets to KCB as security. In addition, it previously placed a prime piece of land as a separate security. The other items placed for the offer, he said, were present and future fixed assets, plant, machinery, vehicles, computers, an office, tools, warranties, and contracts.

Nthei argued that KCB acknowledged the interests of new investors on December 10, 2024, and extended the grace period by another 30 days.

He argued that the appointment of the receiver managers was premature, unwarranted and unnecessary.

“Applicant has received two firm offers of Sh1 billion and Sh800 million and is in the final stages of negotiations of the transactions with the investors to sale the business for the purpose of substantially settling the debt a fact which the 1st respondent is fully aware of.  The said acquisition shall be jeopardized to the grave prejudice and detriment of the applicant and all parties in the event that the orders sought herein are not granted,” said Nthei.

Proctor currently has operations in Uganda, Tanzania and Rwanda through distributors. It plans to enter Burundi and Ethiopia.