https://new.kenyalaw.org/akn/ke/judgment/kehc/2026/9121

Northcote Business Centre Limited & 3 others v KCB Bank Kenya Ltd & 2 others (Insolvency Cause E077 of 2025) [2026] KEHC 9121 (KLR) (Commercial and Tax) (25 June 2026) (Ruling) Neutral citation: [2026] KEHC 9121 (KLR) Republic of Kenya In the High Court at Nairobi (Milimani Commercial Courts) Commercial and Tax Insolvency Cause E077 of 2025 RC Rutto, J June 25, 2026 Between Northcote Business Centre Limited 1st Applicant African Network For The Prevention And Protection Against Child Abuse And Neglect 2nd Applicant Philista Minjal Onyango 3rd Applicant Elizabeth Miriam Audi Onyango 4th Applicant and Kcb Bank Kenya Limited 1st Respondent National Bank Of Kenya Limited 2nd Respondent Mogalapali Mahalakshmi 3rd Respondent Ruling 1.Before this Court for determination are two applications. The first is a Notice of Motion Application dated 8th January, 2026, brought by the Applicants under Sections 534, 537, 538, 539 of the Insolvency Act among others provisions. In the Application, the Applicants seek, inter alia, a declaration that the Notice Of Appointment of Administrator dated 4th December, 2025, by which the 1st Respondent purported to appoint the 3rd Respondent, Mogalapali Mahalakshmi, as the Administrator over the whole property and affairs of the 1st Applicant, is illegal, unfair, procedurally improper, and therefore, null and void. 2.The application is founded on the grounds set out on its face and supported by the affidavit by the 4th Applicant on behalf of all the Applicants, who are shareholders of the 1st Applicant. 3.The Applicants aver that the 1st Applicant is the registered owner of L.R. No. 2/178 (Original No. 2/318 & 319) located in Kilimani, upon which the 1st Applicant has developed residential property known as Northcote Apartments (“the property”). They contend that on 16th December, 2025, they became aware of the appointment of the 3rd Respondent as an administrator when a group of unidentified individuals entered the property, disrupted operations and interfered with tenants and occupants without prior notice. The incident prompted the Applicants to report at Kilimani Police station under OB xx/1612/2015, following which police officers restored order. 4.The Applicants state that they only subsequently became aware, through documents served upon the property manager and residents, that the 1st Respondent had filed a Notice of Appointment of Administrator on 4th December, 2025, in these proceedings without prior notice to them. 5.The Applicants contend that the declaration of insolvency and appointment of an administrator were unlawfully made, lacking both legal and contractual basis, and have resulted in significant disruption to the operations of the 1st Applicant. They assert that the appointment has created confusion within the development, giving rise to parallel management structures issuing conflicting directions to tenants, occupants and service providers. It is further contended that insolvency proceedings demand strict compliance with the statutory requirements, and that only a creditor holding a valid debenture or qualifying floating charge may appoint an administrator without recourse to the court. In the Applicant’s view, no valid act of insolvency has been demonstrated, no adequate notice was given and the entire process was conducted in a clandestine and procedurally unfair manner, contrary to the principles of good faith and fairness. 6.The Applicant further deposes that the development arose from a joint venture involving the African Network for the Prevention and Protection Against Child Abuse and Neglect (ANPPCAN) and the Onyango family, who contributed land for the project. The objective, they state, was both to generate income and to ensure long-term long-term financial sustainability of ANPPCAN while compensating the Onyango family for its land contribution. They asserted that the financing obtained from the National Bank of Kenya Limited (National Bank) was represented as an Islamic banking arrangement structured on a Musharaka-type partnership model involving shared risks and rewards rather than a conventional commercial loan facility. On that basis, they regarded the National Bank as a partner rather than a mere lender. 7.The Applicants allege that despite this relationship, National Bank failed to act in good faith, citing delayed disbursements, lack of transparency, failure to provide timely financial information, and other actions that allegedly hindered completion and efficient management of the apartments. They maintain, however, that the facility has been restructured over time, is supported by a standby letter of credit, and continues to be serviced in accordance with arrangements made between the 1st Applicant and National Bank. 8.The Applicant further contends that National Bank has historically played an integral role in the management of the development and that it would be unjust for a financial partner to frustrate the project and then invoke insolvency proceedings. They set out multiple grievances, including, delays in releasing commissions to agents, failure to remit service charge funds for maintenance, inaction on purchasers’ complaints, delays in title processing, and failure to discharge charges for fully paid units. They argued that these actions have adversely affected the development’s reputation and commercial viability. 9.It is further alleged that KCB subsequently acquired the business of National Bank and later transferred the same to Access Bank Kenya PLC. The Applicant contend that they were never notified of any such assignment or transfer of rights and obligations. They argue, that, if such an assignment or transfer occurred, the Respondents were under a duty to notify the 1st Applicant and that KCB remain bound by the existing contractual arrangements. In her view, KCB cannot disregard those arrangements and unilaterally exercise enforcement powers inconsistent with the parties’ prior dealings. 10.The Applicants maintain that there is no factual or legal basis for declaring the 1st Applicant insolvent. They assert that the company remains operational, continues to manage the apartment complex and is engaged in ongoing business activities. They emphasize that the viability of the business relies heavily on its reputation, the integrity of its title process, and the confidence of tenants and prospective buyers. It is contended that the administration poses a real risk of irreparable harm to the business, its shareholders, employees, tenants and other stakeholders. The Applicants further argue that granting the orders sought would not prejudice the Respondents, as proceeds from rent and sales would continue to be deposited into the escrow account. They observe that the lenders interest is already secured by a legal charge thereby eliminating any risk of dissipation. 11.Conversely, they contend that continuation of administration may precipitate unnecessary liquidation, resulting in loss of value, damage to the business leading to substantial prejudice and irreparable harm. On that basis, they urge the Court to intervene and preserve the subject matter pending determination of the dispute. 12.The second application is dated 29th April, 2026. The Applicants seek injunctive reliefs restraining the Respondents, their agents, servants or any persons claiming under them from selling, transferring, advertising or in any way disposing of the apartments known as Northcote Apartments on Land Reference No. 2/178 (Original No. 2/318 & 319) pending the hearing and determination of the insolvency proceedings. They also seek orders permitting the previous management, Northcote Business Centre Limited, to resume control of the property pending determination of the suit, together with costs. 13.The application is supported by the affidavit of the 4th Applicant, sworn on behalf of the Applicants, who are shareholders of the 1st Applicant. The Applicants contend that they recently learnt that the 3rd Respondent, purporting to act as administrator, advertised the Northcote Apartments for sale despite the pendency of these insolvency proceedings and an earlier application challenging the legality of the administration. They assert that the intended sale is premature, unlawful and undertaken in disregard of ongoing court proceedings. 14.The Applicants dispute the legality of the 3rd Respondent’s appointment and maintain that the Respondents lack authority to administer or dispose of the property. They further allege that since the appointment, management of the property has deteriorated leading to reduced rental collections, tenant dissatisfaction, and vacancies. It is also alleged that the apartments are being marketed in a manner likely to result in undervaluation; including bulk sales on an “as is” basis. The Applicants contend that the intended sale will occasion irreparable loss, render the pending proceedings nugatory and deprive them of their proprietary rights. 15.The Respondents opposed both applications. The 3rd Respondent avers that she was validly appointed by KCB pursuant to debentures creating a floating charge over the 1st Applicant’s assets. She explains that her appointment as administrator was made on 4th December, 2025, pursuant to the terms of a Debenture dated 21st July, 2020, a Supplemental Debenture dated 24th August, 2021, and an all assets debenture dated 25th July, 2022. According to the 3rd Respondent, those debentures created a qualifying floating charge over the assets of the 1st Applicant, thereby entitling KCB to appoint an administrator under the provisions of the Insolvency Act, 2015. 16.She states that the appointment complied with all statutory requirements, including filing, publication in the Kenya Gazette and advertisement in the Nation newspaper in compliance with the Insolvency Act. Upon appointment, she assumed control of the company’s assets and engaged a property manager to oversee operations, rent collection and maintenance. 17.She disputes the Applicants’ account of the takeover and maintains that her actions were lawful and assisted by police officers where necessary. She further states that she has been verifying ownership claims concerning the apartments, noting discrepancies between recorded sales and claims by alleged purchasers. 18.The 3rd Respondent also raises concerns regarding diversion of funds, alleging that proceeds which ought to have been deposited into an escrow account under the Deed of Assignment were instead diverted to a different account maintained with Absa Bank. Investigations into the company’s financial affairs are said to be ongoing. 19.They contend that the Applicants have engaged in parallel litigation by filing another suit and application seeking substantially similar orders in HCCOMM No. E851 of 2025, Northcote Business Centre Limited & Others v KCB Bank Kenya Limited & Others. She avers that the institution of multiple proceedings amounts to an abuse of the court process and is intended to circumvent proper adjudication of the dispute. 20.In response to the second application dated 29th April, 2026, the 3rd Respondent affirms that KCB lawfully acquired the rights of National Bank and was entitled to enforce the relevant securities and appoint an administrator. She maintains that her appointment, made on 4th December, 2025, was pursuant to valid debentures and in full compliance with the Insolvency Act. She further confirms that the administration was duly publicised. She admits advertising the apartments for sale on 24th April, 2026, as part of the lawful realization of assets, subject to reserve prices. She denies allegations of mismanagement, reduced income, or deterioration of the property. 21.Finally, the 3rd Respondent contends that the Applicants have failed to establish the conditions for the grant of an injunction. She argues that no prima facie case has been demonstrated, no irreparable loss established, and that the balance of convenience favours continuation of the administration. She further asserts that the Applicants’ conduct amounts to an abuse of process through parallel litigation aimed at frustrating the administration. She urges the Court to dismiss the application and allow the administration to proceed in accordance with the law. 22.The 1st Respondent in opposing both applications filed a Replying Affidavit sworn on 26th May, 2026, by Joseph Muli, the Relationship Manager for the 1st Respondent. States that as at 9th January, 2026, the 1st Applicant was indebted to the Bank in the sum of USD 16,019,637.96 and that the applications are a strategic attempt to frustrate enforcement of the Bank’s security and debt recovery rights. He further accuses the Applicants of material non-disclosure and misleading the court by omitting crucial facts concerning the financial arrangements and defaults that gave rise to the administration. 23.The 1st Respondent challenges the participation of the 2nd, 3rd and 4th Applicants and the 2nd Respondent in the proceedings. He points out that the insolvency proceedings were originally commenced between KCB Bank Kenya Limited and Northcote Business Centre Limited only, and contends that no formal application for joinder was ever made nor any court order issued admitting the additional parties into the proceedings. Consequently, he argues that those parties lack locus standi and that the pleadings and affidavits filed by them ought to be struck out. 24.He then sets out the history of the financial relationship between the 1st Applicant and the lender. That National Bank initially advanced a Musharaka-Ending-With-Ownership facility to finance the Northcote Apartments development on Argwings Kodhek Road, Nairobi. The original facility, offered in July 2014, amounted to Kshs. 218,300,000/- and was secured by legal charges over the project property. Over time, the 1st Applicant sought and obtained additional financial accommodations to support the project, resulting in several letters of offer, addenda and security instruments. According to him, these arrangements demonstrate a structured and secured lender-borrower relationship rather than the partnership arrangement alleged by the Applicants. He places particular emphasis on the security documents executed by the 1st Applicant. 25.He states that through successive letters of offer and addenda, the 1st Applicant expressly agreed to provide National Bank with a series of all-assets debentures which included debentures valued at Kshs. Kshs.1,030,434,655/-, Kshs. 26,526,217.94/- and a further debenture for Kshs.502,000,000/-. He avers that all the debentures were duly registered with the Registrar of Companies and constituted valid and enforceable all-assets debentures creating qualifying floating charges over the 1st Applicant’s assets. 26.He further states that the Standby Letter of Credit facility valued at USD 16,000,000 was issued by National Bank at the request of the 1st Applicant to facilitate settlement of existing indebtedness. The facility was later utilized in connection with a trade loan arrangement between the 1st Applicant and Lamar Commodity Trading DMCC. He states that the Standby Letter of Credit was valid for twelve months and expired on 22nd March, 2024. That upon demand by the beneficiary, National Bank honoured its obligations and remitted the required funds. Thereafter, the Bank issued a replacement Letter of Credit in March 2024, which was similarly called up and paid. He argues that the Applicants have deliberately misled the Court by portraying the facility as continuing in force when, in reality, it had already expired and had been honoured. 27.He also explains that through Gazette Notice No. 4666 dated 11th April, 2025, the Central Bank of Kenya approved the transfer of certain assets and liabilities from National Bank to KCB. That pursuant to Section 9 of the Banking Act, all agreements, securities, debentures and financial arrangements relating to the 1st Applicant automatically vested in KCB by operation of law. He further avers that the 1st Applicant was formally notified of the transfer through a letter dated 30th May, 2025, and subsequently engaged directly with KCB concerning its banking arrangements, thereby demonstrating full knowledge of and acquiescence in the transfer. He therefore rejects the Applicants’ assertion that KCB lacked authority to enforce the securities or appoint an administrator. 28.He further avers that the Applicants have concealed the fact that the 1st Applicant persistently failed to meet its repayment obligations under the financial facilities. He avers that despite several restructurings and accommodations extended by the Bank over the years, the 1st Applicant remained in substantial default. According to him, the company presently owes KCB USD 16,019,637.96 and has demonstrated no genuine intention of settling the debt. He further states that prior to the transfer of the debt to KCB, the 1st Applicant’s account with National Bank was already overdrawn by USD 3,314,486.99 and that subsequent financial interventions were undertaken to regularize the account. 29.He states that under a Deed of Assignment dated 25th July, 2022, the 1st Applicant assigned rental income from the property to National Bank as additional security and agreed that rental collections and sale proceeds would be deposited into a designated escrow account. The Bank subsequently agreed to a revenue-sharing arrangement intended to facilitate apartment sales and project operations. However, according to him, the 1st Applicant breached those arrangements by selling apartment units without the Bank’s knowledge and diverting sale proceeds from the designated escrow account into an account maintained at Absa Bank. He asserts that these diverted funds remain unaccounted for and that the diversion significantly undermined the Bank’s ability to recover its debt. 30.With regard to the appointment of the administrator, he maintains that KCB holds valid and enforceable all-assets debentures over the 1st Applicant’s assets and that the Applicants themselves do not dispute the existence of those debentures. He states that following the transfer of the National Bank portfolio, all securities and financial instruments vested in KCB. Consequently, that KCB was entitled to exercise the rights of a secured creditor, including appointing an administrator under the Insolvency Act. He argues that the repeated defaults by the 1st Applicant justified the exercise of that statutory power and that the appointment was undertaken lawfully and in accordance with the relevant security instruments. 31.He also states that since her appointment, the administrator has implemented a transparent process for collecting rental income, ensuring that all proceeds are properly accounted for. He contends that the Applicants only moved to challenge the administration when the Bank’s recovery efforts began to take effect and that their applications are intended solely to frustrate lawful enforcement measures. 32.He maintains that KCB was legally entitled to appoint the administrator because the debentures constituted qualifying floating charges over the whole of the 1st Applicant’s property. He further argues that the Applicants have failed to establish a prima facie case, have not demonstrated any irreparable harm, and are not entitled to injunctive relief because any loss they may suffer is purely financial and compensable by damages. He therefore urges the Court to dismiss the applications with costs. 33.The Applicants filed a Further Affidavit sworn by Elizabeth Miriam Audi Onyango, the 4th Applicant, in response to the Replying Affidavit filed sworn by the 3rd Respondent. She disputes the circumstances surrounding the takeover of Northcote Apartments by the 3rd Respondent. She denies the allegation that the 3rd Respondent was accompanied by police officers, but instead, she arrived with a group of unidentified individuals whom she describes as goons. According to her, none of the persons present wore police uniforms or identified themselves as police officers and no evidence has been produced by the Respondents to support the allegation that the operation was conducted under police escort. 34.She states that the individuals forcibly entered the premises without lawful authority, prompting the Applicants to report the incident to Kilimani Police Station on 16th December, 2025, under OB No. 52/16/12/2025. She further points out that the takeover occurred on 16th December, 2025, a day before the Gazette Notice of 17th December, 2025, which in her view casts doubt on the legality and propriety of the Respondents’ actions. She contends that since the unprocedural takeover and assumption of the premises, several items have gone missing from the premises. She depones that the presence of the Officer Commanding Station (OCS) was necessitated only because the directors, who are elderly women, felt threatened and vulnerable and sought police protection. She further denies the Respondents’ allegation that any director resided on the property. 35.Regarding the management of tenants and rental collections, she states that tenants had already paid their security deposits into KCB and National Bank accounts and that the Respondents were therefore collecting security deposits unlawfully by demanding payments that had already been made. She also rejects the assertion that the Banks were unaware of the status of apartment units that had been sold as all units consistently appeared in monthly management reports furnished to the Banks from 2023 onwards. She further states that an email was sent to the Banks in 2024 specifically notifying them of the sold units, the sales having occurred before July 2022. She further asserts that the Respondents had been supplied with agreements for sale and documentary proof of payments relating to purchasers of apartment units, including Unit D12. 36.She disputes the Respondents’ claim that the administrator is managing the affairs of the 1st Applicant in a manner designed to preserve it as a going concern. Instead, she alleges that the Respondents are operating through intimidation and the use of goons, creating fear among apartment owners and tenants. That this atmosphere has caused tenants to vacate the premises and undermined confidence in the management of the apartments. She therefore maintains that the Respondents’ conduct has been detrimental to the operations, occupancy, and commercial viability of the Northcote Apartments. 37.Regarding the existence of another suit, HCCOMM/E851/2025, she clarifies that the said suit seeks general damages arising from what the Applicants consider to be the Respondents’ unlawful conduct from the date of execution of the joint venture agreement up to the date of judgment. She therefore maintains that the existence of the separate proceedings does not diminish the grievances raised in the present matter. 38.The Applicants also filed a further supporting affidavit sworn on 5th May, 2026, in which the earlier arguments are buttressed. She adds that the 2022 Debenture relied upon by the Respondents does not contain any provision authorizing the appointment of an administrator. She challenges the Respondents’ assertions regarding the performance of the property under administration and contend that financial records demonstrate a significant decline in rental collections as reflected in the administrator’s reports between December 2025 and January 2026 indicating a marked reduction in revenue and a corresponding decline in tenant occupancy, a revelation that the administration has adversely affected the financial performance of the apartments rather than preserving or improving it. 39.She reiterates that the Applicants only became aware of the intended administration on 16th December, 2025, the very day the administrator and her agents entered the premises. According to her, the opaque manner in which the administration was introduced created uncertainty among tenants regarding where and to whom rent should be paid. She attributes rental arrears recorded during the administration period to this confusion and the lack of clear communication from the administrator. She further states that dissatisfaction among tenants and apartment owners has escalated to the point where legal proceedings have been instituted against the administrator and the property management company appointed by her, SEDCO. 40.She alleges that residents have complained of aggressive conduct, refusal to recognize security deposits already paid by tenants, and a general deterioration in the quality of management services. Another issue raised in the affidavit concerns the management of vacant apartment units, which remained vacant because necessary improvement works, particularly heating solutions for Block E, had not been undertaken despite repeated requests and proposals. She argues that the failure to address these issues has resulted in the loss of substantial rental income and has diminished the value and attractiveness of the apartments. In her view, if the improvements had been implemented, occupancy rates and revenue collections would have significantly increased. 41.She also maintains that all proceeds from apartment sales after the execution of the Deed of Assignment dated 25th July, 2022, were duly deposited into the designated escrow account. She further argues that the Respondents have improperly included transactions dating back to 2012, 2013 and part of 2014 in their calculations despite the fact that the financing arrangement with National Bank only commenced in August 2014. According to her, several apartment sales had been completed before National Bank became involved in the project, and the Bank had been informed of those transactions before extending credit facilities. She further challenges the indebtedness claimed by the Respondents as being inadequately explained, illegitimate or unsupported by documentation. She asserts that the Applicants are effectively being asked to accept a substantial debt without transparency in its computation. 42.On 18th May, 2026, parties were directed to file written submissions in respect of the applications. The Applicants’ and the 1st & 2nd Respondents’ submissions, respectively, are dated 5th June, 2026. The 3rd Respondent’s submissions are dated 8th June, 2026. Applicants’ submissions 43.The Applicants contend that the central issue before the Court is whether the appointment of the 3rd Respondent as administrator of Northcote Business Centre Limited was lawful. They further seek injunctive relief to restrain the Respondents from selling, disposing of, or otherwise dealing with the company’s assets pending determination of the dispute. The Applicants submit that before an administrator can lawfully be appointed, the affected company must be notified of any alleged default and afforded an opportunity to remedy the same. According to them, the administration process undertaken by the Respondents violated both the governing contractual arrangements and the principles of fairness because no notice of default, demand for payment, or opportunity to rectify any alleged breach was ever issued. They argue that an appointment made without compliance with these requirements is unlawful and incapable of being sustained by the Court. 44.The Applicants recount the history of the financial relationship between the 1st Applicant and National Bank of Kenya as stated in their affidavits. According to them, the Respondents have failed to demonstrate compliance with contractual obligations, rendering the appointment of the administrator procedurally defective and unlawful. They therefore submit that the appointment was irregular and that it would be improper to permit an irregularly appointed administrator to continue administering the company or disposing of its assets. 45.The Applicants also reject allegations that they improperly diverted apartment sale proceeds to Absa Bank. They contend that all monies received were applied towards construction costs and project-related obligations, which ultimately benefited the lender. They further argue that the parties continued negotiating and extending financing arrangements even after the alleged diversion had occurred. In their view, the continued dealings between the parties demonstrate that the alleged diversion of funds was never treated as a material default and cannot now be relied upon as a basis for the appointment of an administrator. They describe the issue as a red herring raised belatedly to justify an otherwise unlawful appointment. 46.The Applicants submit that the appointment of the 3rd Respondent is fundamentally defective because KCB lacks a qualifying floating charge capable of supporting an out of court appointment of an administrator under Part VIII of the Insolvency Act. They argue that no floating debenture was executed between the 1st Applicant and KCB. They further contend that the Respondents failed to disclose any legitimate act of insolvency and that the company remains solvent and operational as a going concern. According to the Applicants, any financial distress experienced by the company was largely caused by National Bank’s own conduct. They invoke the equitable principle that a party should not be permitted to benefit from its own wrongdoing. 47.The Applicants also emphasize that after KCB acquired National Bank, they actively sought clarification regarding their obligations and the status of the facility. They submit that instead of receiving meaningful responses, they were met with an abrupt appointment of an administrator. In their view, the appointment was premature, unnecessary, undertaken in bad faith, and has significantly worsened the company’s financial position. Consequently, they urge the Court to set aside the appointment and restore the previous management. 48.On procedural competence, the Applicants oppose the Respondents’ argument that the proceedings are defective because additional parties were joined in the insolvency cause. They rely on Nairobi High Court Insolvency Notice No. E013 of 2018, I & M Bank Limited v ABC Bank Limited & Another [2021] KEHC 12977 (KLR), where the Court held that disputes concerning the propriety of an administrator’s appointment can be determined within the insolvency proceedings themselves and do not necessarily require a separate suit. They further invoke Section 692 of the Insolvency Act, arguing that procedural technicalities should not be used to defeat substantive justice where no prejudice has been demonstrated. They submit that the Respondents have fully participated in the proceedings and cannot claim to have suffered any prejudice. 49.The Applicants contend that if the Respondents are permitted to proceed with the advertised sale of apartment units, proprietary interests will be irreversibly altered and management control fragmented. According to them, once units are sold to third parties, the consequences will be difficult, if not impossible, to reverse even if the Applicants ultimately succeed. The Applicants also criticize the administrator for recording substantial management reimbursements despite the decline in revenue, arguing that these circumstances demonstrate mismanagement and opacity. 50.The Applicants submit that the core business of the 1st Applicant is the sale and letting of residential units and that the administration has undermined both activities. They allege that tenants have vacated due to fear and uncertainty while prospective purchasers have been deterred by the prevailing circumstances. According to the Applicants, the evidence demonstrates depressed collections, increased arrears, deteriorating amenities, tenant complaints, unpaid commissions, and market distrust. They argue that permitting asset disposals under such conditions will inevitably result in undervalued sales that will destroy rather than preserve the business. The Applicants contend that they have established actual and irreparable harm. They submit that unless the Court intervenes, the company will cease to operate as a going concern, shareholder investments will be lost, and the apartments will be disposed of at below-market values on an “as is” basis. Conversely, they argue that granting an injunction merely preserves the status quo and safeguards the subject matter pending the Court’s determination of the legality of the administration. They therefore submit that the balance of convenience overwhelmingly favours preservation rather than disposal of the company’s assets. 1st & 2nd Respondent’s Submissions 51.The 1st & 2nd Respondents identified four issues for determination – whether the Applicants and the 2nd Respondent are properly before Court; whether the 1st Respondent holds valid securities entitling it to appoint an administrator; whether the appointment complained of was lawful and whether the Applicants have met the settled threshold for the grant of injunctive or conservatory relief. 52.The Respondents challenge the competency of the proceedings and the standing of some of the parties. They submit that the insolvency proceedings were originally instituted between Northcote Business Centre Limited and KCB concerning the appointment of the administrator. According to the Respondents, the 2nd, 3rd and 4th Applicants, together with the 2nd Respondent, were never formally joined to the proceedings through a proper application or court order. Consequently, that those parties lack locus standi to file pleadings, affidavits, or seek substantive relief. They therefore urge the Court to strike out the pleadings filed by parties who were never properly joined to the suit. In support of this argument, they rely on Order 2, rule 15 of the Civil Procedure Rules. 53.Regarding the second issue on the lending relationship between the parties and the validity of the security instruments, they submit that there existed a long-standing and carefully documented lender-borrower relationship between National Bank of Kenya and the 1st Applicant, under which various financial facilities were advanced to fund the Northcote Apartments development. They argue that the facilities were secured through several all-assets debentures executed by the 1st Applicant as earlier noted. According to the Respondents, these debentures were duly registered with the Registrar of Companies and certificates of registration issued, thereby placing their existence and enforceability beyond dispute. They emphasize that the Applicants do not deny executing the securities but only challenge the consequences flowing from them. The Respondents therefore submit that once the 1st Applicant voluntarily created the debentures, the secured creditor became entitled to exercise all contractual and statutory rights arising therefrom, including the appointment of an administrator. 54.The Respondents reject the Applicants’ contention that KCB lacked authority to rely on securities originally granted to National Bank of Kenya. They submit that the transfer of assets and liabilities from National Bank to KCB was lawfully undertaken and published in the Kenya Gazette as contemplated under section 9 of the Banking Act. The Respondents also point to evidence showing that the 1st Applicant was notified of the transfer and thereafter engaged directly with KCB regarding its banking arrangements. They contend that such conduct is inconsistent with any suggestion that KCB was a stranger to the lending relationship. 55.On the issue of default, the Respondents submit that the evidence demonstrates substantial indebtedness arising from the Standby Letter of Credit and related facilities, and that as at 9th January, 2026, the 1st Applicant owed KCB USD 16,019,637.96. According to the Respondents, the Applicants have not candidly disclosed the full extent of this indebtedness while simultaneously seeking equitable relief from the Court. The Respondents further contend that the 1st Applicant assigned rental income from the Northcote Apartments development to the lender and despite benefiting from concessions and revenue-sharing arrangements granted by the lender, the 1st Applicant sold apartment units without the lender’s knowledge and diverted sale proceeds away from the agreed escrow account into another bank account. 56.According to the Respondents, the Applicants are therefore seeking equitable relief while having themselves undermined the agreed repayment mechanism. In support of their argument, the Respondents rely on Bahadurali Ebrahim Shamji v Al Noor Jamal & 2 Others [1998] KECA 255 (KLR) in submitting that the Applicants have failed to disclose material matters concerning the indebtedness, escrow arrangements, sale of apartment units, and diversion of proceeds, and therefore do not deserve the equitable remedies sought. 57.The Respondents then submit that the Applicants have failed to establish a prima facie case with a probability of success because the material facts remain largely uncontested. In particular, they emphasize that the financial facilities were advanced, the all-assets debentures were executed and registered, the lending relationship was lawfully transferred to KCB Bank, the 1st Applicant defaulted on its obligations, and the administrator was appointed pursuant to rights arising from those securities. 58.In support of the applicable legal test, the Respondents rely on Mrao Ltd v First American Bank of Kenya Ltd & 2 Others [2003] eKLR, and the principles in Giella v Cassman Brown & Co. Ltd [1973] EA 358. They further cite Nguruman Limited v Jan Bonde Nielsen & 2 Others [2014]eKLR. They submit that the Applicants’ case fails at the very first hurdle. On irreparable harm, the Respondents argue that the dispute arises entirely from a commercial lending relationship involving ascertainable financial obligations and securities. They maintain that any loss allegedly suffered by the Applicants is purely financial and can readily be compensated through an award of damages. Relying again on Nguruman Limited v Jan Bonde Nielsen & 2 Others [2014] eKLR, they submit that an injunction is only available where the Applicant demonstrates actual, substantial and irreparable injury incapable of compensation by damages. Since the alleged prejudice in this case is quantifiable and monetary in nature, they argue that the Applicants have failed to satisfy this requirement. 59.The Respondents further submit that the balance of convenience favours allowing the administration process to continue. According to them, restraining a secured creditor from enforcing validly registered securities despite substantial indebtedness would cause greater prejudice to the creditor and undermine the integrity of secured lending transactions. 60.These Respondents submit that the applications are incompetent, lack merit, and they urge the Court to dismiss both applications with costs. 3rd Respondent’s submissions 61.The 3rd Respondent supports and relies on his responses to the Applicant’s applications and submissions filed by the 1st and 2nd Respondents. 62.While relying on the decision of the Court of Appeal in Scope Telematics International Sales Limited v Stoic Company Limited & Another [2017] KECA 545 (KLR), she submits that the Applicants’ applications are fundamentally defective because they seek interim orders in proceedings that do not constitute a substantive action. According to her, the Applicants seek orders restraining the administration and impugning the appointment of the administrator, which are in essence the final outcomes they desire. She contends that granting such orders would amount to finally determining substantive rights without the benefit of a proper trial. To reinforce her position, she relies on Voi St Jude Educational Centre Limited & 2 Others v KCB Bank Limited (Commercial Case E005 of 2025) [2026] KEHC 6550 (KLR), where the court dismissed an application seeking interim orders that were not anchored on a substantive suit. The 3rd Respondent urges the Court to adopt a similar approach and dismiss the Applicants’ applications on that ground alone. 63.Without prejudice to her jurisdictional and procedural objections, the 3rd Respondent argues that the Applicants have failed to satisfy the legal requirements for the grant of an interlocutory injunction. The 3rd Respondent also places considerable emphasis on the allegation that the Applicants have not offered any satisfactory explanation for the diversion of proceeds that were contractually earmarked for repayment of the facility. According to her, the diversion of those funds constituted one of the factors leading to default and the eventual appointment of an administrator. She argues that a party responsible for such conduct should not be permitted to rely on its own wrongdoing as a basis for obtaining equitable relief. The 3rd Respondent relies on Beijing Industrial Designing & Researching Institute v Lagoon Development Limited [2015] KECA 365 (KLR), in submitting that the Applicants’ conduct in diverting funds disentitles them from the equitable remedies they seek. 64.The 3rd Respondent rejects the Applicants’ assertion that they will suffer irreparable harm if the administration is allowed to continue. She submits that once property is voluntarily offered as security for a credit facility, it becomes a commercial asset available for realization in the event of default. Consequently, any complaint regarding the manner in which such property is managed or disposed of is capable of valuation in monetary terms and can be adequately compensated through an award of damages. She therefore argues that the Applicants have failed to demonstrate the kind of irreparable injury necessary to justify injunctive relief. 65.The 3rd Respondent further points out that the 1st Applicant knowingly executed the debentures under which she was appointed and expressly accepted that administration was one of the remedies available to the lender in the event of default. Having voluntarily agreed to those terms, she argues that the Applicants cannot now seek to restrain the very process that was contemplated by the contractual documents they executed. In support of this position, the 3rd Respondent relies on John Nduati Kariuki t/a Johester Merchants v National Bank of Kenya Ltd [2006] eKLR, 66.The 3rd Respondent also argues that the balance of convenience strongly favours continuation of the administration. She notes that the debt owed by the 1st Applicant stood at USD 16,019,637.96 as at 9th January, 2026, and continues to accrue interest. According to her, any delay in recovery increases the risk of loss to the lender and undermines the statutory purpose of administration. She further submits that it would be contrary to public interest to permit such a substantial debt to remain outstanding indefinitely, particularly where the borrower has demonstrated unwillingness to comply with repayment obligations. 67.The 3rd Respondent contends that granting the injunction sought would effectively reward default by preventing the lender from exercising rights expressly conferred by the debentures while simultaneously preventing the administrator from discharging her statutory mandate. She therefore urges the Court to dismiss both applications and permit the administration process to continue in accordance with the Insolvency Act and the security instruments executed by the 1st Applicant. Analysis and Determination 68.Having carefully considered the two applications, the affidavits filed by the parties, the annexed documents and the rival submissions, the Court is of the view that the following issues arise for determination;a.Whether the present proceedings are incompetent for want of proper joinder of the 2nd, 3rd and 4th Applicants and the 2nd Respondent.b.Whether the appointment of the 3rd Respondent as administrator complied with the statutory and contractual requirements governing administrationc.Whether the Applicants have satisfied the threshold for grant of injunctive orders sought in the application dated 29th April, 2026. Whether the present proceedings are incompetent for want of proper joinder of the 2nd, 3rd and 4th Applicants and the 2nd Respondent 69.The Respondents raised a preliminary point regarding the competence of these proceedings. Their argument is that the insolvency proceedings concern the appointment of an administrator over the 1st Applicant and that no formal application was made to join the 2nd, 3rd and 4th Applicants or the 2nd Respondent. Consequently, they contend that the said parties lack locus standi. 70.The Court notes that the applications before it seek to challenge the validity of the administration and to restrain actions being undertaken pursuant to that administration. The 2nd, 3rd and 4th Applicants are not strangers to the affairs of the 1st Applicant. The evidence before court demonstrates that they are shareholders and persons whose interests are directly affected by the administration complained of. Their complaints relate to the management, ownership, financing and operation of the Northcote Apartments project and are inextricably connected to the affairs of the 1st Applicant. 71.More importantly, it is noteworthy that the Respondents have fully participated in these proceedings, filed detailed responses and submissions and addressed the merits of the dispute as presented by all the Applicants. No prejudice has been demonstrated that would justify striking out the proceedings on a procedural ground. Further, the Court is guided by Article 159(2)(d) of the Constitution which requires courts to administer justice without undue regard to procedural technicalities. The dispute before Court concerns the validity of an administration affecting substantial proprietary and commercial interests. It would be inimical to the overriding objective of the Insolvency Act to decline consideration of the substantive issues merely because formal joinder orders were not sought at the inception of the proceedings. 72.This Court therefore finds that the objection regarding locus standi and joinder does not defeat the applications presently before Court and proceeds to determine the substantive issues. Whether the appointment of the 3rd Respondent as administrator complied with the statutory and contractual requirements governing administration 73.The Applicants advance three principal arguments. First, they contend that the financing arrangement was in the nature of an Islamic Musharaka partnership rather than a conventional lender-borrower relationship. Secondly, they contend that KCB was not a party to the original financing arrangements and therefore lacked authority to exercise rights arising therefrom including the appointment of an administrator. Thirdly, they contend that KCB did not hold a qualifying floating charge capable of supporting an out-of-court appointment of an administrator. 74.A review of the Further All Assets Debenture dated 25th July, 2022, reveals that Clause 4 creates security over a broad range of assets, including the undertaking and all present and future property, assets and rights of the Company. Clause 5 further provides that, in respect of the assets described under the Fifth limb of Clause 4, the security shall constitute a floating charge. This court is therefore satisfied that the Debenture expressly created a floating charge over the undertaking and assets of the Company. I further note that the charge extends to substantially the whole of the Company's undertaking and assets. Prima facie, therefore, the security bears the characteristics of a qualifying floating charge contemplated under Sections 534 and 537 of the Insolvency Act. 75.However, I also note that the Debenture does not contain any express provision authorising the appointment of an administrator. Instead, Clause 13 expressly empowers the Bank, upon the occurrence of specified events, to appoint a receiver or receiver-manager over the charged assets. The source of the power to appoint an administrator must therefore be found not in the express terms of the Debenture but in the statutory provisions of the Insolvency Act, assuming that the security in question qualifies as a qualifying floating charge. The Applicants further contend that KCB could not rely upon securities originally granted in favour of National Bank of Kenya. 76.The evidence before the Court, however, demonstrates that the assets and liabilities of National Bank of Kenya were lawfully transferred to KCB pursuant to the Banking Act. The transfer was published in the Kenya gazzette by the relevant Cabinet Secretary and the evidence further shows that the 1st Applicant subsequently engaged KCB in relation to the facilities and securities. Accordingly, the Court is satisfied that KCB validly succeeded to the rights and obligations previously held by National Bank and was entitled to enforce the securities vested in it. I say so in appreciation that the Applicants have not disputed the existence of, or the contents of such debentures. 77.The remaining question is whether the statutory conditions necessary to permit an out of court appointment had crystallised at the time of appointment. 78.Having found that the securities executed by the 1st Applicant created a floating charge over substantially the whole of the Company's undertaking and assets and that KCB lawfully succeeded to the rights previously held by National Bank, it is important to determine whether the circumstances existing at the time of the appointment justified invocation of the statutory administration regime. 79.The Applicants' complaint is twofold. First, they contend that no event had occurred that entitled the Respondents to place the Company under administration. Secondly, they argue that even if there was default, the Respondents failed to comply with the contractual and procedural safeguards governing enforcement. In particular, they maintain that no notice of default was issued, no demand was made and no opportunity was afforded to remedy the alleged breaches before the drastic step of administration was undertaken. 80.The Respondents take a contrary position. They contend that the Company was heavily indebted, having accumulated liabilities exceeding USD 16 million. They further assert that the Company had persistently defaulted on its obligations, diverted proceeds from apartment sales and rental income away from the agreed escrow structure and failed to honour repayment obligations despite numerous restructurings and accommodations extended by the lender. According to the Respondents, those circumstances rendered the floating charge enforceable and entitled the Bank to invoke the statutory remedy of administration. 81.The material before this Court demonstrates a long-standing commercial relationship spanning several years involving multiple financing facilities, several restructurings and repeated engagements between the parties regarding repayment and financing. It is therefore difficult to accept the Applicants' suggestion that the appointment of the administrator came entirely without warning or arose in circumstances where there had been no prior concerns regarding repayment. 82.The documentary evidence also reveals that substantial indebtedness remained outstanding. Although the Applicants challenge the manner in which the indebtedness was calculated, and dispute certain aspects of the Respondents' accounting, they do not seriously dispute that substantial sums remained due under the facilities. The Applicants also do not dispute that the security instruments remained in force at the material time as registered under the companies Act notwithstanding that they could have been issued on the foundation of the Islamic banking model. This court notes that the Further All Assets Debenture contains provisions dealing with events of default and the consequences thereof. The Debenture provides that upon the occurrence of specified events of default, all monies secured thereby become immediately payable. Significantly, the relevant provisions provide that such sums become due without demand, protest or other notice. Consequently, the Applicants' contention that the Respondents could not invoke their remedies in the without a formal demand or notice must be considered against the contractual framework voluntarily agreed by the parties. 83.While the Applicants have repeatedly argued that no notice of default was issued, the evidence before court has not demonstrated that the Debenture made service of a notice of default a condition precedent to enforcement of the floating charge. To the contrary, the contractual provisions exhibited by the Respondents appear to contemplate immediate enforceability upon the occurrence of specified events of default. This court is not persuaded by the Applicants' argument that the appointment was unlawful merely because the Debenture does not expressly provide for the appointment of an administrator. As already observed, the Debenture expressly creates a floating charge and grants the Bank extensive enforcement remedies, including receivership. 84.The power to appoint an administrator, however, does not arise solely from the contract. Once a creditor satisfies the statutory requirements applicable to a holder of a qualifying floating charge under the Insolvency Act, it itself confers the right to appoint an administrator under Section 522. The source of that power is therefore statutory rather than purely contractual. A perusal of the instrument of appointment of administrator reveals that KCB is a holder of a qualifying floating charge over all assets of Northcore Business Center, and the appointment was in accordance with Part VIII of the Insolvency Act. 85.I have also considered the Applicants' assertion that the 1st Respondent failed to demonstrate the existence of a qualifying floating charge. Having examined Clauses 4 and 5 of the Further All Assets Debenture, I am satisfied that the security extends to substantially the whole of the Company's undertaking and assets and expressly provides that the assets described under the fifthly limb constitute a floating charge. In the circumstances, I am satisfied that the Respondents demonstrated the existence of a floating charge capable of grounding the statutory appointment mechanism contemplated by the Insolvency Act. 86.The Applicants further argue that the 1st Applicant was not insolvent and remained a viable going concern. While there is evidence that the Company continued to own valuable assets and derive rental income, insolvency for purposes of administration is not confined to complete cessation of business operations or total financial collapse. The administration regime exists precisely to address situations where a company is experiencing financial distress while efforts are made to preserve value for creditors and stakeholders. The existence of ongoing operations does not therefore, by itself, negate the Respondents' right to invoke administration where the conditions for enforcement have arisen. 87.I have equally considered the allegations concerning the manner in which the administrator assumed control of the premises. The Applicants allege that the takeover was undertaken by force and with the assistance of hired individuals, while the Respondents maintain that the process was undertaken lawfully and with police awareness. These competing factual assertions are sharply contested and cannot be conclusively resolved on affidavit evidence alone. In any event, even if the Court were to accept that aspects of the takeover were handled improperly, that would not necessarily invalidate the legal basis upon which the appointment itself was made. The validity of the appointment must be distinguished from the manner in which the appointment was subsequently implemented. 88.Having considered the totality of the evidence, this court is not persuaded that the Applicants have demonstrated any fundamental illegality in the appointment process. Whether the Applicants have satisfied the threshold for grant of injunctive orders sought in the application dated 29th April 2026 89.The Applicants seek, inter alia, orders restraining the Respondents from acting pursuant to the appointment of the 3rd Respondent as administrator, restraining the sale, transfer, disposal or alienation of the apartments comprised in the Northcote Apartments development and preserving the affairs and assets of the 1st Applicant pending determination of the dispute. The Respondents oppose the applications and contend that the Applicants have failed to satisfy the well-established principles governing the grant of interlocutory injunctive relief. 90.The applicable principles are well settled in Giella v Cassman Brown [1973] EA 358 and Mrao Ltd v First American Bank [2003] eKLR. The Applicants must establish a prima facie case with a probability of success, irreparable harm and where in doubt, that the balance of convenience favours them. 91.The application seeks orders restraining the administrator from selling apartments and effectively restoring management control to the Applicants pending determination of the insolvency proceedings. 92.Having already found that the Applicants have failed to demonstrate that the administrator's appointment was prima facie unlawful, the foundation upon which the injunction rests become substantially weakened. Granting the injunction would amount to reversing the administration and restoring control to the directors before the legality of the administration has been conclusively determined. Such an order would be substantially final in nature bearing in mind the statutory objectives of administration under Section 522 of the Insolvency Act, that is, preserving the company as a going concern. 93.The Applicants have argued that the sales would be conducted at undervalue and would irreversibly alter proprietary interests. That concern is not entirely without merit. Once assets are sold to third parties, reversal may become difficult. However, this court must weigh that concern against the undisputed existence of a substantial debt exceeding USD 16 million and the statutory mandate conferred upon the administrator. 94.The Applicants have also alleged declining occupancy, poor management and reduced rental collections attributable to the administration process. The Respondents have denied those allegations and the evidence presented remains contested. At this interlocutory stage, this Court is unable to make definitive findings that the administration has destroyed the value of the development. The alleged losses are essentially commercial losses capable of valuation and compensation. It is not to be ignored that the property was voluntarily issued as security to secure certain financing arrangements with the security duly perfected and registered. In Standard Chartered Financial Services Limited v Manchester Outfitters (Suiting Division) Limited Now Called King Woolen Mills Limited & 2 others [2025] KESC 68 (KLR) the Supreme Court held as follows:“85.…To mitigate that risk, it was both logical and prudent that the appellant should hold securities in the form of a debenture and a legal charge. The object of these securities was to ensure that, in the event of default, as was ultimately the case, the appellant would have enforceable recourse to the property and assets of the Respondent.” [Emphasis mine]From the foregoing, this Court therefore finds that irreparable injury has not been established. 95.The balance of convenience also favours preserving the statutory administration process rather than returning control to the very management whose conduct gave rise to the lender's decision to invoke its security rights. The Applicants have therefore failed to satisfy the requirements for the grant of an injunction. 96.Accordingly, this Court finds that both applications dated 8th January, 2026, and 29th April, 2026, are dismissed with costs. 97.Orders accordingly. DELIVERED, DATED AND SIGNED VIRTUALLY THIS 25TH DAY OF JUNE, 2026RHODA RUTTOJUDGEIn the presence of;Court Assistant: WabwireMr.Gichangi for NBK & KCB BankNo appearance for Applicants