Bankrupt Karuturi Flower Farm Directors Lose Appeal Case

An appeal against a court ruling that required the directors of the now-bankrupt Karuturi flower farm to pay Ksh 30 million to the receiver manager and the company’s creditors for costs paid in a case involving an asset auction and hotel demolition has been ruled unsuccessful.

On July 29, 2022, a directive was issued by a magistrate court mandating the company to pay Ksh10 million in case-related expenses to CfC Stanbic Bank Limited, ICICI Bank, and Kolluri Ventaka Subbaraya Kamasastry. The directors Anitha Karuturi and Sai Ramakrishna Karuturi had filed a motion with the High Court to overturn the magistrate’s ruling and redetermine the expenses. The request to overturn the ruling was however dismissed by Justice David Majanja on grounds that the appeal was submitted after the required 14-day statutory period.

While the contested decision was issued on July 29, 2022, the directors filed the reference on August 22, 2022, meaning it was submitted 10 days late.  Justice Majanja further mandated that the directors pay Ksh.30,000 in additional expenses for the struck-out application to the creditors and receiver management. The lawsuit began with the sale of assets owned by Karuturi Limited due to its inability to repay a Ksh. 383 million loans obtained from CfC Stanbic. After taking into account the costs required by the bank to manage the property throughout the receivership period, the firm’s debt increased over time and, by 2019, it was at Ksh1.8 billion.

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