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 52/1612/2015, 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 or 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
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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 52/1612/2015, 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 or 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
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