Four Prestigious Hotels Run by Red Cross Placed Under Receivership for Failure to Pay Loans

Boma Hotel Nairobi, Red Court, Boma Inn Nairobi and Boma Inn Eldoret all run by the Kenya Red Cross has been placed under receivership after failing to pay dues owed to National Bank of Kenya.

In a news report by Nairobi News on Tuesday, financial statements from the National bank shows Kenya Red Cross was the highest borrower from the lender.

Subsequently, the National bank on Monday appointed PVR Rao as an administrator and further barred the current management from 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,” Rao said in a statement after his appointment.

The business has been insolvent with negative capital, meaning that the entire investment by Kenya Red Cross had been wiped out by the losses. The last time the business had positive capitalization was in 2011. Thereafter, the losses piled and the insolvency levels soared to Ksh 1.4 billion in just three years.

Additionally, Boma Hotel Nairobi was also unable to pay employees retirement savings despite having been deducted and taxes remitted to the Kenya Revenue Authority. Management was also directed to speak with lenders to review the terms of loans, including rescheduling repayment plans.