Hotel Karisimbi in the affluent Kiyovu neighbourhood in Nyarugenge District is up for sale following insolvency after being unable to pay a number of creditors.

The hotel’s troubles are said to have stemmed from bank credit which they were unable to pay.

In September 2016, the Commercial Court-appointed city lawyer Olivier Mukwende as the administrator in hope that the 3-star hotel would turn around and pay back the debt.

A year later, it emerged that the property could not turn around its position and pay its debts while under administration. 

This was in consideration of business trends, available capital and extent of debt.

In November 2017, the commercial court-appointed Mukwende to oversee its liquidation to settle the creditors.

The New Times understands creditors include Development Bank of Rwanda (BRD), Rwanda Revenue Authority, Rwanda Social Security Board, Banque Populaire du Rwanda (BPR) and Nyarugenge District.

The creditors are seeking to recover close to Rwf2 billion from the asset.

Mukwende said that they are still receiving bids for the 3-star hotel which has 20 rooms.

With the hotel in its 4th year since it went into liquidation, concerns of potential gaps in the insolvency law emerge as it lacks a standards process that ought to be followed or bidding timelines.

The lack of such aspects could see the sale process last long driving up the cost of liquidation as the inspection committee made up of creditors have to keep raising advertising fees.

The property has been operational as a hotel since 2012 and was previously a restaurant since 2001 in the affluent Kiyovu neighbourhood was previously among the most popular hotels.

However, in recent years, multiple new hotels have entered the scene across the city including the Kiyovu neighbourhood and increased competition. 

The insolvency of Karisimbi Hotel comes at a time when there have previously been concerns by the Central Bank and finance sector players with regard to hotels featuring prominently on the loan defaulters prior to the pandemic.

This was explained as a result of significant borrowing by sector players without adequate understanding of insights into business projections and trends in the sector.

Many players expected significant growth rates in the sector hence making plans for expansion and upgrades.