The High Court has halted the auctioning of 111-year-old White Rhino hotel in Nyeri.
The iconic hotel was set to be auctioned on Saturday.
Justice Florence Muchemi barred KCB Bank and Garam Investments Auctioneers from selling the hotel and its assets pending the determination of a suit.
“The auction will be stayed on condition that the hotel management deposits Sh50 million into the KCB Bank account within 30 days in respect to its outstanding loan,” said the judge.
The judge issued the order after the hotel, through its management – the Cedarwood Hotels and Resorts Investments Company – filed an injunction against the bank and Garam on Tuesday.
The hotel through lawyer Tom Macharia argued that the sale of the hotel was illegal as it had been undervalued.
“The valuations done by the respondents are contrary to section 97 (3) of the Land Act, which provides that if the price at which the charged land is sold is 25 per cent or below the market value, the charge is in breach of the duty of the care owed,” Mr Macharia said.
Patrick Munene, the director for Cedarwood Hotels and Resorts Investments, stated in an affidavit that his staff had completed five appraisals since March 2016 and that the premier property is highly valuable.
He said the most recent appraisal was in February.
According to Mr Munene, the estate cost more than Sh1.15 billion in 2022, with a reported forced sale value of at least Sh862 million.
“The alleged appraisal report that is being relied upon by the bank shows the property has a market value of around Sh840 million and a forced sale value of over Sh630 million which is ill-conceived,” he said.
The auctioneers stated in a notice published in local newspapers that the facility, which sits on a three-acre plot, had land rates arrears of Sh1.2 million as of July 2021.
“Bidders will be expected to produce a bidding deposit of Sh10 million by way of cash or bankers cheque before being allowed to bid,” Garam said.