The ownership of Grand Ubumwe Hotel could change today, Monday, December 24, as the prime property goes to auction at 10 AM today.
This could be the last of a month-long process as KCB Rwanda tries to claim its unpaid loans amounting to over $18m.
The property is owned by Alykhan Karmali of Mukwano Group and Private Sector Federation Chairman Robert Bafakulera and global multi-national, Chaudhary Group (CG Corp Global).
The bank in September this year wrote to the Rwanda Development Board notifying them of the intention to foreclose on the facility for unpaid loans of over $18M.
The bank preferred an auction after establishing that despite the shareholders’ capacity to pay off the loan; they have failed to settle internal disputes among them.
The disputes are said to have arose following an alleged breach of an agreement that CG Corp would manage the property under its ‘The Zinc’ brand.
However, it is alleged that the two partners (Bafakulera and Karmali) unilaterally terminated the management agreement about three months prior to opening.
The property has been subject to several legal procedures including litigation at the Nyarugenge Commercial Court in Kigali as well as arbitration processes in Dubai.
Last minute negotiations and dispute resolutions have failed to bear fruits.
Lawyer Joseph Ngabonziza is overseeing the auction as the receiver after the sudden resignation of his colleague Athanase Rutabingwa, half way the process.
The disputes among the shareholders also halted the takeover and management of the facility by Hilton Group which had intended to run it under DoubleTree brand, beginning the first quarter of this year.
The case has also been referred to in the showcase of need for quality contracts during partnerships.
Considering the profile of the three shareholders, the stalemate is not a result of inability to pay-back the loan but rather a dispute which also reveals the quality of contract entered.
Ordinarily, a contract ought to take into account aspects such as dispute resolution, grounds of exit among others to ensure appropriate conflict resolution.