Four Red Cross-owned hotels placed under receivership
Four hotels run by the Kenya Red Cross (KRC) have been placed under receivership following huge debts owed to the National Bank that was recently acquired by the Kenya Commercial Bank (KCB).
The four hotels, Red Court, Boma Hotel Nairobi, Boma Inn Nairobi and Boma Inn Eldoret are all managed by the Kenya Red Cross, which, according to NBK’s financial documents, was the biggest borrower from the bank.
NBK on December 16, 2019 appointed PVR Rao as an administrator of the business.
“None of the directors, shareholders, employees and no other person is authorized to transact any business on behalf of the company without express written consent from the administrator,” read a notice from PVR Rao right after his appointment.
According to records, Kenya Red Cross has for many years struggled to paint a picture that the business was doing well.
The reports indicate that the management tried to manipulate books of accounts just to show that their fortunes were not dwindling.
The last time the business had positive capitalisation was in 2011. Thereafter, the losses piled and the insolvency levels soared to Sh1.4 billion in just three years.
Boma Hotels’ woes were so bad that it was unable to pay its employees’ retirement savings despite having been deducted and taxes remitted to the Kenya Revenue Authority.
Boma Hotels’ receivership comes after NBK was acquired by Kenya Commercial Bank (KCB) Group which has prioritized going after loan defaulters.