Supermarket in court to stop disposal of KCC assets pending recovery of Ksh.420M

In an application filed through its lawyer, the supermarket is seeking preservation orders against KCC, including restrictions on the sale, transfer, charging, leasing or other disposal of the dairy processor’s factories, machinery, vehicles, equipment and other properties.

The application also seeks to restrain KCC, its agents and financial institutions from withdrawing, transferring or dissipating funds held in the company’s bank accounts pending the hearing and determination of the application and the subsequent arbitration proceedings.

Naipa is further asking the court to order KCC to provide security for its Ksh.420 million claim within 14 days of service of the order.

The proposed security would be in the form of an irrevocable bank guarantee issued by a reputable commercial bank in Kenya or a cash deposit into an interest-earning joint escrow account held in the names of the parties’ advocates.

In the event KCC fails to comply, Naipa wants the court to order attachment of the dairy processor’s factories, real estate and fixed assets pending the determination and enforcement of the arbitral award.

The dispute arises from a distribution agreement dated January 1, 2022, whose dispute resolution mechanism provides for arbitration under Clause 18(b).

According to the Applicant's lawyer, Phillip Nyachoti, arbitration proceedings between the parties were instituted in accordance with directions issued by the court on December 1, 2025, with hearings scheduled for November 5 and 18, 2026.

Naipa argues that recent government policy pronouncements concerning the restructuring and modernisation of KCC have heightened concerns over the preservation of the dairy processor’s assets before the arbitration is concluded.

The application cites directives announced by President William Ruto during the Agriculture and Food Systems Transformation Summit held at the Jamhuri Park ASK Showground in Nairobi between October 7 and 9, 2026.

Among the measures cited is a proposed government settlement of approximately Ksh.8 billion in outstanding debts and liabilities owed by KCC through the forthcoming Supplementary Budget.

The application also refers to proposed structural changes and modernisation of KCC’s milk processing plants, machinery and supply infrastructure, as well as the reorganisation of its financial operations and payment obligations to dairy farmers.

Naipa Supermarket contends that these developments create a reasonable apprehension that KCC’s assets and funds could be transferred, disposed of or otherwise dissipated before the conclusion of the arbitration.

The supermarket argues that any such transactions could undermine its ability to recover money that may ultimately be awarded in its favour, potentially rendering the arbitration proceedings ineffective.

It maintains that the application was filed promptly following the October policy announcements and seeks to preserve the status quo until the dispute is resolved.

The application is supported by an affidavit sworn by Anthony Munene Kibetu, the managing director of the applicant.

Naipa is also asking the court to certify the application as urgent and hear it ex parte in the first instance, with service initially dispensed with.

The court is yet to determine the application.