KCB Rwanda has suffered a $3.1 million loss from the sale of an estate belonging to a defaulter, DN International, after fighting court battles for more than two years.
The bank was the highest bidder at an auction held a week ago with an offer of Rwf1.12 billion ($1.9 million), about 37 per cent of the Rwf3 billion( $5 million) that it loaned DNI for construction of Green Park Villas in Kigali. The estate was charged as security for the loan.
“The bank decided to offer the reserve price since there was nobody else who offered more than what it offered. It is a loss — we know we will not recover all the money — but we take what is at hand,” KCB Rwanda managing director Maurice Toroitich said.
READ: Outcry as KCB Rwanda moves to recover $5m
DN International (DNI), registered in Rwanda but run by Kenyan investor Nathan Ndung’u Lloyd, defaulted on a loan acquired in 2010 to construct a housing estate, prompting KCB to auction the property.
DNI, which now faces liquidation, had taken out the loan to construct Green Park Villas, a development with 50 housing units in Rusororo on the outskirts of Kigali. Each unit was to be sold at Rwf75 million ($125,000) for those who secured 15-year mortgages with KCB Rwanda.
A memorandum of understanding was signed between DNI, the buyer and KCB Rwanda. But some home buyers paid Rwf53 million ($77,000) cash for a unit. All the money was deposited in KCB Rwanda where DNI had an account.
However, several creditors and home buyers are still up in arms, despite failing to halt the auction. They are still petitioning government to intervene since the estate was DNI’s most valuable asset.
READ: Creditors fight KCB Rwanda’s bid to sell DNI assets
“We are victims because we trusted an investor who was recommended to us by the government. We need a roadmap on how we shall be compensated,” said Francis Bayingana who chairs the committee of the creditors, adding that they will meet this weekend to agree on the way forward.
But KCB Rwanda maintains that the bank has acted according to the law to recover its money.
Under the mortgage law, KCB is a secured creditor, and is therefore given priority under the mortgage law. The mortgage law gives secured creditors the authority to auction mortgaged properties once the clients default on their loan payments as per the loan agreement.
“Anyone who paid cash to DN International using an account in the bank (KCB Rwanda) and the amount that was paid is known — we will work out a settlement plan. Anybody else who has claim on DN international is not a claim on KCB,” Mr Toroitich said, pointing out that any other recovery will be through the liquidator.
In 2010, the mortgage law in Rwanda was amended to allow creditors to lend against the value of the property after financiers rejected a clause stating that only 30 per cent of a property’s value could be subject to mortgage.
With regard to article 30 of the law No12/2009 of 26/05/2009 on issues arising from insolvency, a secured creditor with an asset involved in the insolvency proceedings may apply for retention of such an asset and shall not be considered among creditors. The law gives KCB the right to hold all properties it has acquired as securities for a loan given to DNI.
The East African
No comments:
Post a Comment