KCB Bank Kenya’s Battle with Proctor & Allan Over Multi-Billion Shilling Debt
Nairobi, Kenya – August 6, 2025 – The ongoing financial saga between KCB Bank Kenya and Proctor & Allan (EA) Limited, one of Kenya’s oldest cereal manufacturers, has taken a dramatic turn as the High Court weighs in on a contentious debt dispute. The cereal giant, known for producing household staples like cornflakes, oats, and porridge mixes, has been placed under receivership over a loan default, sparking legal battles and raising concerns about the broader economic challenges facing Kenyan businesses.
A Debt Dispute Escalates
Proctor & Allan borrowed a significant loan from KCB Bank Kenya in 2013, with court documents indicating an initial amount of KSh 1.676 billion to finance the acquisition of a manufacturing facility in Limuru, Kiambu County. Over the years, the company repaid KSh 506 million in interest and penalties, but the outstanding debt, including accrued interest and charges, ballooned to KSh 4.918 billion by February 2025, according to KCB’s demand notice.
On February 21, 2025, KCB issued a demand for immediate payment and, three days later, appointed Swaroop Rao Ponangipalli and Ponangipalli Venkata Ramana Rao as receiver managers to take control of Proctor & Allan’s operations. This move prompted swift legal action from Proctor & Allan, which argued that the bank’s actions were premature and in bad faith, especially given ongoing negotiations with potential investors to settle the debt.
High Court Intervention
On February 27, 2025, High Court Judge Njoki Mwangi issued a temporary injunction restraining KCB from appointing receiver managers and ensuring Proctor & Allan’s directors retained access to the company’s assets, offices, and records. The court’s ruling provided a lifeline to the cereal manufacturer, directing that operations continue as they were before the receivership attempt, pending further hearings scheduled for March 13, 2025.
However, in a significant development on August 1, 2025, the High Court lifted the temporary injunction, allowing KCB’s appointed receiver managers to resume control of Proctor & Allan’s operations. Justice Mwangi ruled that the loan agreements explicitly permitted KCB to appoint receivers in the event of default, which Proctor & Allan did not dispute. The court further noted that KCB was not legally obligated to provide prior notice before appointing receivers, strengthening the bank’s position.
Proctor & Allan’s Defense and Investor Hopes
Proctor & Allan has maintained that KCB acted unfairly, particularly as the company was in advanced negotiations with investors to secure funds to settle the debt. Court filings reveal that on August 27, 2024, both parties agreed to a compromised settlement of KSh 1 billion, to be paid by November 30, 2024. Proctor & Allan informed KCB of a potential investor offering KSh 1.25 billion, with due diligence completed by December 2024. Despite KCB granting a 30-day extension on December 11, 2024, the bank issued a new demand for KSh 1 billion by January 31, 2025, and later escalated its claim to KSh 4.9 billion, which Proctor & Allan disputes as exceeding the agreed amount.
The company has also secured two firm offers from investors—one for KSh 1 billion and another for KSh 800 million—to either settle the debt or sell the business, with negotiations nearing completion. Proctor & Allan argues that KCB’s abrupt receivership move jeopardizes these efforts, potentially leading to financial ruin and litigation from disrupted supplier contracts.
Economic Context and Stakeholder Impact
The receivership of Proctor & Allan, a company founded in the 1940s and backed by prominent Kenyan tycoons like Ngugi Kiuna, Zephania Mbugua, and Edward Njoroge, underscores the broader economic pressures facing Kenyan businesses. High taxes, intense competition, and a tough economic climate have strained the company’s ability to service its loan, mirroring challenges faced by other firms like Mastermind Tobacco and Labh Singh Harnam Singh Limited, both recently placed under administration.
The dispute has also raised concerns about job losses and disruptions to food supply chains. The abrupt appointment of receivers reportedly led to the termination of all Proctor & Allan employees without notice, a move the company’s director, Stephen Nthei, described as destabilizing. With the receivers now in control, the company’s future hinges on whether a restructuring plan can be implemented or if liquidation becomes inevitable.
KCB’s Stance and Industry Trends
KCB Bank Kenya, part of KCB Group Plc, has defended its actions as a necessary step to recover funds and protect its interests. The bank, one of Kenya’s largest financial institutions with an asset base of KSh 2 trillion, has been grappling with a rising tide of non-performing loans, with a 29% jump reported in 2024. KCB’s aggressive recovery measures reflect broader industry trends, as lenders face increasing defaults amid economic challenges like high interest rates and inflation.
What’s Next?
As the case awaits further court directions, all eyes are on Proctor & Allan’s ability to finalize its investor deals and KCB’s next moves in the receivership process. The outcome will not only determine the fate of one of Kenya’s oldest food processors but also signal how the financial sector navigates the delicate balance between debt recovery and supporting struggling businesses in a challenging economic environment.
For more updates on this developing story, stay tuned to street.co.ke.