Creditors who delivered supplies or bought homes from the defunct DN International are celebrating a court ruling that has cancelled an auction through which KCB Bank Rwanda had taken over their land.
The ruling, made by the Commercial High Court last month, dismissed the public auction of land that was used by DN International as collateral in the Green Park Villas housing project in Rusororo Sector, Gasabo District.
Through that auction, which was conducted in 2015, KCB Bank Rwanda had sold the land in order to recover the money it lent to DN International and bought the property itself.
Now, judges at the Kigali based Commercial Court in Nyamirambo have cancelled the auction after establishing that some homes that were auctioned did not belong to DN International’s collateral to KCB Bank Rwanda and that not all the rules that govern a public auction were respected.
The ruling was welcomed by people who had delivered supplies or bought homes from the defunct DN International, saying it gives them a second chance to recover money they invested in the real estate project in case the land is sold as part of an on-going liquidation process.
In late 2017, at least 75 of the creditors, including Francis Bayingana as the lead petitioner, launched a lawsuit in order to dismiss KCB’s ownership of the land DN International had used for the Green Park Villas housing project.
"The verdict means that KCB is now a creditor like any other creditors of DN International. As the procedure of insolvency law stipulates, all creditors are now going to get something from the remaining property out of DN International’s assets according to one’s investments in the project,” Bayingana told The New Times on Tuesday.
He had always argued that it was unfair for KCB to take over the land that was used as collateral in the Green Park Villas housing project in Rusororo area after DN International failed to complete the construction works.
The petitioner said that he and other investors had sued as part of last-ditch efforts to help those who supplied construction materials or made down payments for housing units to recover their money by selling the land on which the homes were to be erected.
Green Park Villas housing project was still incomplete when the scandal-hit DN International failed to operate, forcing the owner, Nathan Lloyd, to flee the country in 2011.
Bayingana and others have since sued the defunct DN International, which is now under liquidation, seeking over Rwf780 million in compensation as the realtor failed to deliver the promised homes and hadn’t managed to pay all its critical suppliers of materials and services ranging from security guards to iron sheet and cement providers.
"So far, we are still negotiating in order to get the money we invested,” Bayingana said.
When DN International folded, as a financier of the project, KCB through the public auction now dismissed by the commercial court had seized the incomplete estate in an effort to recover over a Rwf1.5-billion loan it was owed.
But the bank did not take care of paying those who supplied construction materials or the prospective homeowners who had made down payment on the houses.
The Insolvency Administrator for DN International, Vedaste Mugemanyi, equally welcomed the court ruling, explaining in an interview with this newspaper that the verdict gives him a chance to have more assets left by the defunct company which could be sold in order to pay its creditors.
It is not yet clear if KCB Bank Rwanda, the main loser in the ruling, will appeal against it as George Odhiambo, the Bank’s Managing Director, told this newspaper on Tuesday that he hadn’t yet looked at the verdict in order to decide the way forward.
Before the Green View Park Villas estate, DN International, which was founded by Kenyan-US businessman Nathan Lloyd, had been embroiled in wrangles in another estate; Hill View Estate in the nearby Masaka in Kicukiro District.
The developer, who had received full payment from prospective home owners in the estate, failed to pay the bank – then Fina Bank, the current GT Bank - that had financed the development of the 28-home estate.
The owners were then surprised to learn that the property they had occupied for a few months was going under the hammer for the bank to recover its money.
Eventually a negotiated agreement was reached and the auction was called off.
editor@newtimesrwanda.com