Court upholds Equity Banks right to auction 30 vehicles from Paddy Kenya to recover a 2.34 million loan, rejecting claims that prior asset sales settled the debt.
Paddy Kenyas repayment capacity collapsed amid COVID-19, after failing to prove its North Airport Road property was worth 1.93 million.
Equity Bank advances recovery as defaults surge, with collateral holdings rising 80 to 8.9 billion, reflecting stricter lender action across Kenyas banking sector.
A Kenyan court has granted Equity Bank, the flagship banking subsidiary of Equity Group, led by Group CEO James Mwangi, the authority to auction a fleet of 30 motor vehicles belonging to Nairobi businessman Patrick Nthiga Mvungu, marking a decisive step in recovering an outstanding 2.34 million loan issued to his trading firm, Paddy Kenya.
The decision deals a significant blow to the financially distressed trading firm owned by Nairobi businessman Patrick Nthiga Mvungu, as business disruptions eroded cash flows and derailed restructuring plans.
Borrowers settlement claim dismissed as court upholds lenders rightsThe High Court dismissed Paddy Kenyas argument that the partial sale of secured property in 2022 constituted a full settlement of the debt. Justice B.M. Musyoki ruled that the borrower failed to provide evidence supporting this claim, affirming that the repayment obligations remained binding despite the sale proceeds.
The dispute traces back to an August 2017 credit facility in which Paddy Kenya borrowed Ksh120 million 1 million, secured by prime property along North Airport Road and additional collateral, including trucks and prime movers. Over time, the debt expanded through restructuring agreements, further advances, and accrued interest, ballooning to Ksh395 million 3.06 million before the partial disposal of the property reduced the outstanding balance.
Equity Bank maintained that the Ksh100 million 773,788 realized from the property sale was insufficient to extinguish the liability, and the court sided with the lender, awarding judgment for Ksh302.2 million 2.34 million plus interest at 13 percent per annum until full repayment.