The High Court has upheld Equity Bank Kenya Limited’s decision to place Glee Hotel Limited under administration, rejecting attempts by the hotel company to suspend the administrator’s appointment and return control of the business to its directors.
In a ruling delivered on August 12, 2026, Justice Dr Freda Mugambi found that the appointment of the administrator was lawfully and validly made in accordance with the Insolvency Act. The judge dismissed two applications filed by Glee Hotel while allowing an application by the administrator seeking protection from interference by the company’s directors.
The dispute arose after Equity Bank, which had advanced credit facilities to Glee Hotel, exercised powers granted to it under debentures executed by the parties and appointed an administrator following the hotel’s default.
The court noted that Glee Hotel did not dispute that Equity Bank had advanced it credit facilities, that the company had provided various securities, including qualifying floating charges, and that it subsequently defaulted on repayment.
A consent judgment had also been entered between the parties on February 24, 2026, but the court found that its terms were not honoured by Glee Hotel.
Glee Hotel challenged the administrator’s appointment on several grounds, including that it had not received prior notice. It also argued that Equity Bank had alternative securities it could pursue instead of placing the company under administration.
Justice Mugambi rejected the arguments, finding that the relevant notice requirement under Section 535(1) of the Insolvency Act applied to a holder of a prior qualifying floating charge rather than to the company or its directors.
The court further found that the debentures gave Equity Bank the power to appoint an administrator after default and that the bank was entitled to choose from the lawful debt-recovery mechanisms available to it.
“Having executed the security instruments freely and having derived the benefit of the facilities advanced pursuant thereto, the Company cannot now be heard to resile from an agreement into which it voluntarily entered,” the court stated.
The ruling also revealed that Glee Hotel directors transferred KSh23.07 million from the company’s account to Workright East Africa Limited on July 9, 2026, without the administrator’s consent. The court found that the recipient had not submitted a proof of claim to the administrator and said the transaction effectively preferred an unsecured and unverified creditor over creditors with higher statutory priority.
The administrator also complained of being denied passwords, credentials and access to the hotel’s bank accounts, records and IT systems. The court found that such actions interfered with the administrator’s statutory functions.
Meanwhile, the administrator presented evidence showing that room occupancy had increased from 7.51 per cent on July 1 to 24.41 per cent by July 12 after his appointment. He had also engaged a marketing consortium and contracted World Travel Group UK Limited to boost bookings while reviewing a wage bill said to represent more than 47 per cent of gross income.
Justice Mugambi ultimately ruled that the administrator should remain in control, noting that a company under administration cannot have its management divided between the administrator and incumbent directors.
The administrator’s application dated July 6 was consequently allowed with costs, while Glee Hotel’s applications dated July 7 and July 13 were dismissed with costs.
