The High Court has thrown out a case by breakfast cereals processor, Proctor & Allan (EA) Ltd, that sought to halt KCB Bank’s takeover of the company through receivership, ruling the lender acted within its contractual rights after years of loan defaults.
- •The decision ends Proctor & Allan’s attempt to regain control from two receiver managers appointed by KCB in February to run the Limuru-based cereals and snacks maker.
- •Proctor & Allan’s financial troubles stem from a series of credit facilities it took from KCB between 2012 and 2022, amounting to KSh 80.45 million and US$28.9 million, secured by charges over its assets, including real estate, machinery, receivables, and contracts.
“A Court of law cannot re-write a contract between parties, as they are bound by the terms of their contract unless coercion, fraud or undue influence are pleaded and proved,” Judge Njoki Mwangi ruled.
“Once a company is placed under receivership, its Directors may only institute legal proceedings in the name of the company with the express authority of the appointed Receiver or upon obtaining leave of the Court,” she added.
- •The company fell into arrears in October 2022, triggering a debt restructuring and a one-year repayment window for KSh 1.5 billion.
In August 2024, both sides agreed to a last-ditch settlement where KCB would write off a large portion of the debt if Proctor & Allan paid KSh 1 billion by November 2024. The company failed to meet that deadline, instead seeking more time to court investors. The bank extended the window to January this year, but no funds were received.
Talks with a prospective buyer, Equatorial Nuts Processors Ltd, collapsed after due diligence. Another investor — Broadway Bakery Ltd — offered KSh 800 million, which KCB rejected. In February, the bank demanded full repayment of roughly KSh 37 million and US$37.8 million, reflecting reinstated original terms plus accrued interest. Three days later, it appointed two receivers to take over management.
In court, Proctor & Allan argued that the receivership was premature and claimed the bank had acted in bad faith. It also alleged that the demand notice was improperly served and that ongoing investor talks should have delayed enforcement.
The judge noted that the loan contracts allowed KCB to seize control without prior notice after a default. The August settlement was conditional, and missing the payment deadline meant the bank could revert to the full debt. The court also ruled that once receivers were in place, the company’s directors had no legal authority to sue without the receivers’ consent.
Proctor & Allan (EA) Ltd is one of the country’s oldest food processors. It was controlled by Nefira Holdings, which owned 76.82% of the company and is fronted by a trio of high-profile Kenyan industrialists including Zephaniah Mbugua, the former East African Cables chairman; Edward Njoroge, former KenGen chief executive; and Ngugi Kiuna, a prominent agribusiness and real estate investor.
The group acquired the cereals maker from Unga Group in 1999, and moved operations from Nakuru. In 2015, they poured KSh 1.8 billion into a fully automated plant in Limuru to boost production of its cereals, porridges, cake mixes, and the fortified flours for local and regional markets.
Despite its pedigree and investment muscle, the company’s heavy borrowing to fund expansion left it exposed. Following the collapse of the suit, KCB Bank’s receivers will remain in charge of Proctor & Allan’s operations until its debt is recovered.
