Equity Bank has an appetite to place businesses in receivership, according to an independent analysis.
The James Mwangi-led lender accounts for 35% of all businesses placed under receivership in the last 5 years.
Equity is followed distant second by KCB and Uhuru Kenyatta family owned at 15% each.
National Bank and Aga Khan owned DTB hold 8% each while ABSA, I&M, Cooperative Bank, EADB and Ecobank have 4% each.
In the last one year alone, Equity Bank accounts for 40% of the business that are under receivership followed KCB at 30% and NCBA at 10%.
Among the firms affected include Trans Century, East African Cables, Savanna Cement, Royal Swiss Bakery, Hash Energy, Mulleys Supermarket, Invesco, Explico, Tuskys etc.
Last month, the high court suspended the move by Equity to place TransCentury on receivership till the case filed by TransCentury is heard and determined.
TransCentury accuses Equity Bank PLC of employing a predatory behavior in its bid to place it under receivership over a Sh4.8 billion debt.
In court documents, TransCentury accused the bank of swooping on it even while being privy of advanced negotiations on the means and ways of settling the debt. It adds that it was taken by surprise when Equity Bank appointed Receiver Managers.
Last month, the firm got a reprieve when it obtained court orders to stop the move. TransCentury accuses the bank of acting in bad faith and attempting to take over its operations without due process of the law.
Negotiations to repay the debt was already at an advanced stage when Equity Bank ambushed them with the appointment of receiver managers in spite of availability of cash to pay part of the debt.
The debt dispute emanates from facilities that both TransCentury and its subsidiary firm East Africa Cables obtained from the lender. Equity is demanding US$34,343,752 (about Sh4.8 billion) in outstanding debt from TransCentury.
Secondary to the dispute also is where monies from a recently concluded rights issue where Sh800 million were deposited at Corporative Bank.
“I verily believe that the directors of TransCentury have started divesting the funds received from the recently concluded rights issue of the receiving account being in Cooperative Bank of Kenya to the detriment of Equity Bank and other creditors,” Equity Banks Legal Manager Kariuki King’ori stated in court papers.
The investment firm argues that it had informed the bank on the 9th of June 2023 that it was waiting the approval from Fair Competition Commission (FCC) of Tanzania before accessing the funds raised from the rights issue and planned to use part of the monies to repay the debt.
TransCentury insists that the bank became aware that it had received FCC approval on 14th June which meant that the Sh828 million Rights Issue funds were now available but moved to appoint the receivers.
On 19th of June, Equity Bank announced that it had appointed Muriu Thoiti and George Weru from PriceWaterhouseCoopers (PWC) as joint administrators of both Trans Century and its subsidiary of East African Cables.
However two days later, TransCentury moved to court under a certificate of urgency when Justice Alfred Mabeya issued the order suspending a decision by the bank to appoint two receiver managers to take over the company until the dispute is heard and determined.
Court documents show the investment firm has listed Equity Bank Kenya Limited, George Weru and Muniu Thoiti as respondents.
Trans Century through its lawyer, Philip Nyachoti told the court that the forceful takeover had prejudiced and destabilized the company’s operations even after discussing with the bank a road map for repaying the loan.
“The company informed the bank that they are in the final stages of finalising rights issues to the tune of Sh2 billion for purposes of injecting capital into the business and have enough to offset the outstanding loan balance but they declined,” said Nyachoti.
In the court documents, Trans Century adds; “That as such, parties have been in extensive negotiations with a view of reconciling Equity’s account and determining the actual outstanding amount with the last correspondence being on the 12th of June with the bank requesting for more information about our holding company hence the appointment is premature and in bad faith.”
The East Africa Cables says it obtained a Sh1.7 billion loan from Equity between 21st January 2021 to 10th March 2021 and has since paid Sh617,076,299.