Two investment companies have received an extension after a commercial court allowed them more time to address the remaining $50 million debt they owe to Equity Bank.
Justice Francis Gikonyo permitted East Africa Cables Limited and TransCentury 90 extra days to settle their debts. Earlier, on October 18 of the previous year, Justice Alfred Mabeya had provided these companies with a 120-day extension due to their evident intent to fulfill the financial obligation. Nonetheless, in February of this year, the businesses submitted an appeal for further time to comply with the payment requirements.
Through their lawyer Philip Nyachoti, the firms explained that significant efforts had been made to secure financing for the debt’s settlement.
He stated that following the October directives from Mabeya, TransCentury, and East Africa Cables Limited, various measures, setups, programs, and systems were implemented with the aim of settling the debts.
He informed the court that they reached out to multiple financial institutions to obtain funding for settling the debts, including a firm incorporated in the Cayman Islands.
Nyachoti informed the court that TLG agreed to provide the necessary funding to settle the outstanding debts. He mentioned that they were unable to meet the 120-day deadline because of the intricacies involved in the transaction, various logistical issues, and the holdups resulting from the holiday season.
It is stated that TLG needs an extra three months to finish its due diligence and finalize the funding.Nyachoti presented letters and other documents to the court as evidence.
However, the defendants in the case contended that the companies failed to show any significant and novel pieces of evidence that would justify a review or an extension of time.
In evaluating the submissions from all sides, Justice Gikonyo approved the petition submitted by the investment companies.
"The court should strive for fairness by balancing the interests between the plaintiff—a major trading firm—and the first defendant, a secured creditor. In doing so, the judiciary must choose an approach that minimizes the likelihood of unjust outcomes," stated the judge.
The judge took into consideration the account statements filed by the firms showing that some amount had been paid towards settling the debt. This he said, indicates good faith by the East African Cables in making the repayments.
He additionally mentioned that the company showed evidence of ongoing talks with TLG being on track and that the due diligence process has commenced.
"This isn’t a situation where the borrower is trying to avoid their responsibilities; instead, they aim to secure an agreement that allows the company to navigate through restructuring its debts," he explained.
The judge stated that if the companies are put into administration now, it would interrupt the current discussions and hinder attempts to stabilize the situation as well as erode investor and stakeholder confidence.
"Therefore, I am convinced that there is adequate justification for revisiting the directives issued on October 18 by extending the deadline for adherence. In my view, prolonging this period by 90 days would result in a smaller inequity under these conditions," Judge Gikonyo stated.
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