Red Cross managed hotels, Boma Hotels have been placed under receivership following failed attempts at repaying loans owed to the National Bank of Kenya (NBK).
The four hotels, Red Court, Boma Hotel Nairobi, Boma Inn Nairobi and Boma Inn Eldoret are all managed by the Kenya Red Cross, which is according to NBK’s financial documents was the biggest borrower from the bank.
According to reports, the hotels’ management had for years tried to manipulate the business’ accounting books to give the illusion that business was good.
NBK has since appointed P V R Rao as an administrator and streaked Kenya Red Cross’ 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,” read a notice from P V R Rao right after his appointment.
Boma Hotels’ receivership comes after NBK was acquired by Kenya Commercial Bank (KCB) Group which has prioritized going after loan defaulters.
According to financial statements, the last time that the hotels had positive capitalization was in 2011, meaning the entire investment by the KRC had been wiped out by losses.
Losses began piling up and the insolvency levels of the hotels is said to have risen to 1.4 billion shillings in a record 3 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.
Read Also: NBK Jumps Back To Profitability Ahead of Share Swap Deadline