A petitioner has sought to wind up Avenue Hospital for failure to pay them over Ksh22 million it incurred by September 2022.
Session Blue Contractors in the case filed before the High Court state that the hospital has failed to honor payment after they were contracted to expand and refurbish the hospital’s Garden City Clinic which is on Plot LR. No. 29271 in an agreement on 24th June 2022.
The agreement stated that Avenue Hospital would be liable to pay interest on outstanding amounts at the annual rate of 20 percent compounded daily and which is to accrue until the full outstanding amount is settled.
“The company has failed or ignored to settle the outstanding amount despite the same falling due in September 2022 when the petitioner completed his works and handed over the construction site to the company”, the petition reads in part.
They add that they filled a statutory demand to Avenue to pay the outstanding debt on January 23rd 2023 but they have failed to honour it.
The insolvency petition number E016/2023 seen by Dhahabu Kenya, the case has been filed by Session Blue Contractors. It lists John Antony Etyang as a Director of the company. The petition also lists other Directors as Humphrey Robert Mwangi Mugo and Paul Karara Ngunjiri. The company Secretary is Zakani Registrars.
“To recover the debt, the petitioner’s advocates sent multiple demand letters directly to the respondent and its advocates but the respondent has been reluctant with no explanation to settle the outstanding debt of Ksh22,401,168.14 together with the interest and legal fees”, the petition reads in part.
A final demand letter was made on 14th February and upon not receiving any response, the contractors instructed their advocates, MAK and Partners Advocates to file the petition.
The agreement signed in June 2022 states the amount due was then Ksh18.5 million which was supposed to be completed in nine weeks. It was signed by Mr. Imran Osman, the acting Chief Executive Officer of the hospital at the time. It also states that the date of the practical completion of the assignment was 31st August, 2022.
Session Contractors was signed by John Etyang, the Managing Director.
Mega structures limited were the project managers for the assignment.
Avenue Group is owned by US private equity fund Evercare Health Fund, which is managed by Texas Pacific Group. Its investors include TPG Rise Fund, IFC, BII, DFC, Philips, Medtronic, and the Gates Foundation.
Evercare operates medical facilities in emerging markets across South Asia and Africa. In Kenya, it has also invested in Nairobi Women’s Hospital, Metropolitan Hospital, Healthlink Management, and Ladnan Hospital.
In October last year, it was reported that the International Finance Corporation (IFC) is set to lend Avenue Hospital Ksh1.4 billion ($11.7 million) to fund a new wing at its Nairobi facility in Parklands and refinance existing debt.
In a demand letter dated 10th November 2022, Session Contractors ask Avenue Hospital to pay Ksh14.45 million, together with interest of Ksh118,615.54 which continued to accrue interest. It would mean that the hospital had by then only paid close of Ksh4 million.
In a demand notice sent to Avenue Health Care Limited on 15th December, Session Blue want the hospital to settle within 14 days outstanding balance of over Ksh10.9 million, outstanding interest of over Ksh401 million and debt collection fees of Ksh200, 000.
G&A Advocates representing the hospital responded requesting for 21 days to consider their counter offer to stagger the payments. They confirmed that the contractors were initially paid. Ksh7.6 million of the Ksh18.5 million on August 17th 2022 and another Ksh3.5 million on 21st November, 2022. They therefore propose to pay in four instalments from 31st December 2022 to 31st March 2023, an offer that was rejected by the contractors as not only unreasonable, but one failing to account for the interest agreed upon in the contract and legal fees.
The counter offer the contractors issued was for 50 percent owed together with interest on 31st January 2023, the balance to be paid on or before 28th February, 2023 and legal fees of Ksh250, 000.
In further communication between the law firms, they fail to agree on how much is due to be paid.
Session contractors issued insolvency notice of 21 days on 18th January, 2023 which was received and stamped on 23rd January, 2023.