The Kenya Red Cross (KRC) run Boma Hotels has been placed under receivership after failing to repay loans owed to National Bank of Kenya.
According to financial documents, KRC was the biggest borrower from the National Bank of Kenya, which was consequentially acquired by KCB Group.
The hotel creditors have also appointed PVR Rao as an administrator, and further barred the current management from the business.
Preceding the placement under receivership, financial records had raised major concerns about the viability of the hotel, as the business had huge debts.
According to local newspaper The Standard, the business was insolvent with negative capital, meaning the entire investment by the KRC had been wiped out by losses. The last time the business had positive capitalisation was in 2011. Thereafter, the losses piled and the insolvency levels soared to KSh1.4 billion in just three years.
Additionally, the hotel was also unable to pay employees’ retirement savings despite having been deducted and taxes remitted to the Kenya Revenue Authority.
Management was also directed to speak with lenders to review the terms of loans, including rescheduling repayment plans.
None of the directors, shareholders, employees and no other person is authorised to transact any business on behalf of the company without express written consent from the administrator.PVR Rao, Administrator
The Boma Hotels brand and portfolio consist of properties namely Red Court, Boma Hotel Nairobi, Boma Inn Nairobi and Boma Inn Eldoret.