By The Weekly Vision Reporter
What began as a commercial dispute between businesswoman Mary Wambui Mungai and Equity Bank has evolved into a case that raises broader questions about an unresolved gap in Kenya’s Banking Act concerning the treatment of guarantors when borrowers default. On its face, the dispute appears to be a conventional debt-recovery matter: a borrower failed to meet the terms of a negotiated settlement, the agreed deadline lapsed, and the court declined to alter a consent judgment voluntarily entered by the parties. However, the legal arguments advanced in the case revive an issue that Parliament debated more than a decade ago but ultimately left unresolved.
The dispute stems from a consent agreement dated 24 February 2026, under which Equity Bank agreed to accept Sh7.75 billion as full and final settlement of liabilities owed by Mary Wambui and the companies associated with her. The figure represented approximately 85 per cent of the outstanding debt, with the remaining balance expected to be cleared through a refinancing arrangement involving KCB Bank. The agreement granted the borrowers 45 days to complete payment, with both parties expressly acknowledging that time was of the essence.
When the deadline expired without payment, Wambui returned to court seeking an additional 60 days, arguing that the refinancing process had substantially progressed but had been delayed by the extensive due diligence required for a transaction of that magnitude. Equity Bank opposed the application, maintaining that the matter had already been conclusively determined through a binding consent judgment and that the court lacked jurisdiction to vary its terms.
In its ruling, the court observed that Wambui had not alleged fraud, mistake, misrepresentation or collusion, the recognised grounds upon which a consent judgment may be set aside. Instead, she had acknowledged both the debt and the validity of the settlement agreement. Consequently, the request for an extension of time was dismissed. Although the court declined to extend the payment period, it granted limited interim relief by temporarily suspending the bank’s statutory power of sale, subject to Wambui depositing Sh100 million within seven days of the ruling delivered on 5 June.
Subsequently, on 6 July, Equity Bank appointed Kamal Anantroy Bhatt of Anant Bhatt LLP as administrator of Glee Hotel under Section 563(2)(b) of the Insolvency Act, 2015. The appointment effectively transferred control of the hotel’s affairs to the administrator and suspended the powers of the company’s directors over its assets. While the debt recovery aspects of the dispute have attracted considerable attention, the more significant legal issue lies elsewhere.
Wambui’s legal team has argued that Equity Bank should first have exhausted the assets of the principal borrower, Glee Hotel Limited, before enforcing securities provided by guarantors, including Wambui personally and companies such as Purma Holdings, Charma Holdings and Albatross Aviation.
That argument revives a legal question that has lingered in Kenya for years. The issue previously arose in litigation involving brothers Ngengi Muigai and Kung’u Muigai against KCB Bank. They challenged the lender’s decision to realise securities provided by guarantors while, according to their argument, assets belonging to the principal borrower had not first been exhausted.
The dispute attracted sufficient public and legislative attention that Parliament considered amending the Banking Act to require lenders to first pursue the assets of the principal borrower before enforcing guarantees.
However, the proposed amendment was never enacted. The absence of such a statutory requirement has left Kenyan courts to determine disputes on a case-by-case basis, guided by the terms of individual contracts and established principles of banking and commercial law.
As matters stand, the Banking Act does not expressly require lenders to first exhaust the borrower’s assets before enforcing guarantees or securities provided by third parties. Consequently, where both the principal borrower and guarantors have charged property as security, disputes continue to arise over the order in which those securities may be realised.
The Wambui litigation therefore extends beyond a private commercial disagreement. It once again places before the courts, and potentially policymakers, the unresolved question of whether Kenya’s banking laws adequately balance lenders’ contractual rights with protections available to guarantors.
Court records indicate that Wambui has not disputed the existence of the debt. The filings acknowledge both the outstanding liabilities and the validity of the consent settlement. Her explanation for the default has centred on delays in anticipated refinancing, prolonged government payment delays and restrictions affecting some accounts during previous investigations. Court documents further indicate that more than Sh2.5 billion has already been repaid on facilities dating back to 2020.
Separately, a 2021 criminal case in which Wambui and her daughter, Purity Njoki, faced charges relating to alleged unpaid taxes amounting to approximately Sh2.2 billion linked to government tenders was withdrawn in January 2023 after a tax settlement was reached with the Kenya Revenue Authority (KRA).
Whether or not Equity Bank ultimately succeeds in recovering the remaining debt, the litigation has highlighted an area of Kenyan banking law that remains unsettled despite earlier legislative consideration.
Until Parliament chooses to revisit the issue or appellate courts provide clearer guidance, lenders, borrowers and guarantors will continue to navigate legal uncertainty whenever multiple securities exist for a single debt.
The Wambui dispute may therefore be remembered not only for the fate of Glee Hotel but also for reigniting debate over whether Kenya’s Banking Act should expressly define the order in which lenders may pursue borrowers and guarantors when commercial loans fall into default.
Editor’s Note: This article examines the Wambui–Equity Bank dispute as a case study highlighting an unresolved issue within Kenya’s Banking Act concerning guarantor liability. References to court proceedings are based on publicly available records. No findings of misconduct beyond those contained in the public record are asserted. The reference to the 2021 tax case is included solely for background context and reflects that the proceedings were withdrawn following a tax settlement with the Kenya Revenue Authority
