Citizen TV owner SK Macharia is fighting a rearguard action against being declared bankrupt.
The State Law Office published his bankruptcy notice in the Kenya Gazette on October 2.
In the 1980s managing director of Oceanfreight Transport Livingstone Waithaka paid him Sh500,000 for a plot of land which was never transferred to him. He went to court to recover the money and the courts found in his favour. With a compound interest rate of 19 per cent, Macharia’s debt has now ballooned to Sh293 million.
Having lost in the Court of Appeal this year, Macharia reportedly intends to challenge his bankruptcy ruling in the Supreme Court and has deposited the disputed amount owing in a Judiciary suspense account.
Macharia’s assets include Royal Media, Citizen TV, Citizen FM and vernacular stations Ramogi and Inooro FM.
An administrator or receiver has not yet been appointed because Waithaka is now assured of the money paid into the suspense account if Macharia’s final appeal fails.
However, the bankruptcy order remains a serious operational problem for Royal Media as worried banks may call in their loans.
Potentially the state could take over and supervise Macharia’s business with the aim of settling all his debts.
The bankruptcy receiving order was triggered by last year’s Court of Appeal decision that rejected Macharia and his wife’s opposition to being declared bankrupt over a Sh500,000 debt from the 1980s which had ballooned to Sh293.4 million.
Mark Gakuru, the Official Receiver based at the State Law Office, was reportedly in line to review and establish Macharia’s liabilities and assets and start settling his debts.
“The Official Receiver will prepare a statement of affairs detailing all his assets and liabilities with a view of settling them,” a source at the Attorney General’s office said on Monday.
However yesterday another official at the AG’s office said, “This is a private matter between the creditor and the debtor.”
Potentially Macharia could lose access to his businesses, bank accounts and property that would be under the watch of the receiver.
Macharia can keep the Official Receiver at bay by issuing a plan on how he intends to repay all his debts and enter into court-supervised agreements with all the creditors. He is also reported to have outstanding debts with the Communications Authority of Kenya.
The High Court in 2001 ordered Macharia to repay the debt to Waithaka with an annual interest of 19 per cent compounded monthly from December 1986 following the botched land deal.
Macharia ignored the ruling until 2008 when Waithaka served him with a bankruptcy notice.
At the Court of Appeal, the judges ruled that Macharia and his wife challenged the ruling on the existence of the debt instead of the bankruptcy suit.
Waithaka says he paid Sh500,000 as a deposit to the couple in the 1980s for a plot in Nairobi’s Industrial Area which was then valued at Sh2 million. The land was allocated to the Macharias by the state in 1982.