An Eldoret High Court has handed a temporary reprieve to billionaire David Langat by issuing an injunction blocking auctioneers tasked by Stanbic Bank from selling his properties in Nandi and Mombasa counties after the tycoon defaulted on a KSh 2 billion loan.
- Stanbic Bank offered Langat the loan in April 2020 at an interest rate of 9.25% per annum and expected it to be repaid within 120 months.
- Langat intended to use the loan to restructure his tea estate, but he was unable to pay off the loan.
- Stanbic- through an auctioneering firm called Garam Investment – announced an auction of Langat’s tea estate and office blocks in Mombasa in August 2023.
The lender entered into an agreement with Langat, which would have seen the businessman make monthly payments of KSh 12.5 million and sell some of his assets in Tanzania to settle the facility.
The two-phased approach fell through due to a crunch in potential buyers of Langat’s properties in Tanzania. Stanbic allowed him to sell the properties to the Tanzanian government, but the deal has been delayed because it is subject to regulatory approval and budgetary requirements.
The lender issued the businessman with a notice in January 2024, which was resolved six months later after Langat agreed to pay KSh 37.5 million extend the agreement. Two months later, the lender placed a second auction advert targeting the tycoon’s Mombasa properties.
Court Asks Parties to Renegotiate
In his petition, Langat argued that the standstill agreement with the lender was not breached but it was subject to circumstances beyond his control. They said that a hurried auction of their client’s properties would result to undervaluation and would hinder a fairer resolution of the dispute.
Langat’s legal team also requested to scrutinize Stanbic Bank’s proposal to receive KSh 12.5 million every month, regarding it as a figure constructed from ‘unlawful interest variations’.
Last year, the lender’s legal team tried to convince that Langat had defaulted based on the terms listed in the facility letters and the standstill agreement. They added that Stanbic bank had acted in good faith by extending the timelines for repayment and actively entered negotiations with the businessman to restructure the loan.
In the ruling to the application to halt the auction of Langat’s properties, Justice Reuben Nyakundi considered the sale of the Tanzanian assets as a major factor in issuing the injunction. He was particularly optimistic that if the transaction is finalized, it could settle the debts owed to Stanbic. “The premature sale of the charged properties could irreversibly prejudice these negotiations, creating a form of injury that transcends pure financial computation,” Justice Nyakundi stated in the ruling on 20th January 2025.
“While the defendants (Stanbic & Garam) legitimately seek to recover their facility, their position is secured by charged properties. Conversely, an immediate sale could cause irreversible damage to the plaintiffs’ (David Langat and his properties) business operations and broader community interests,” he added. He also urged both parties to revisit their initial agreement and restrategize a more convenient way of settling their dispute. It also ordered for a fresh valuation of the properties in 45 days.
