A Kenyan-owned real estate company in Rwanda could be sold off if a liquidation case by the Rwanda government succeeds.

The government began liquidation proceedings in the country’s commercial courts against DN International, registered in Rwanda but run by Kenyan investor Nathan Lloyd, over debts amounting to Rwf3.5 billion ($5.8 million) owed to Fina Bank and KCB Rwanda.

While last week Kenya’s B&B Heritage signed an agreement with Fina Bank Rwanda taking over the investments of DN International, KCB Rwanda risked losing its Rwf3 billion ($5 million).

Under the agreement, B&B Heritage will pay DN International’s loan with Fina Bank worth Rwf500 million ($830,000), money that was initially borrowed to construct one of its housing projects — Hill View Estates —in Kabuga, a suburb on the outskirts of Kigali.

“This settlement [under the agreement] is only settling one case, which is the Fina Bank case; however, we know that there are other claims against DN International. There is an insolvency case ongoing in our courts today that is going to be looking at DN International and all its creditors and how the company can undergo the insolvency proceedings,” Clare Akamanzi, the acting chief executive officer at Rwanda Development Board (RDB), told The EastAfrican.

KCB Rwanda has issued an auction notice to recover its debt.

The saga over the housing project, which has been running since early last year, has left the government embarrassed since it had sanctioned the DNI investments in the first place.

READ: Home buyers in the cold as Kenyan investor faces auction

On the face of it, the entry of DNI into Rwanda’s real estate business four years ago was to be a game-changer. With the fanfare that met its entry — a presidential welcome to boot — the firm was clearly after big deals.

Apart from the two estate projects, the firm clinched several other lucrative deals including a contract to build the American embassy in Kacyiru on the outskirts of Kigali.

DNI had taken out the loan to construct Green Ark Villas, a development with 50 housing units in Rusororo on the outskirts of Kigali. Each unit was to be sold at Rwf75million ($125,000).

Louise Kanyonga, Rwanda’s Registrar-General, said the company’s insolvency proceedings had been suspended by the court to first settle the case with Fina Bank.

“The court declared suspension [of the case] until this agreement was finalised, but now it is going to resume. Within the next couple of weeks, that is where KCB Rwanda as a creditor will have first preference,” Ms Kanyonga said.

Ms Akamanzi said the government was forced to intervene in the Fina Bank case to rescue homeowners who had paid for their houses. Each home was purchased from DN International at a cost of Rwf55 million ($91,666) in 2007.

But Fina Bank had initially wanted to auction the 19 units after DN International had failed to pay the debt.

“It was a very complicated case; we had to go through negotiations. Fina Bank had to be paid because they financed the project and they secured creditors’ interest on the houses because they had registered a mortgage for that. But the house owners had also paid for their houses; it was just that the money was not paid to the bank,” Ms Akamanzi said.

The Rwanda Revenue Authority (RRA) has also waived interest and penalties accrued on unpaid taxes by DN International to facilitate the agreement. The company had accumulated a tax debt of approximately Rwf300 million ($500,000).

But, home owners will now be required to pay property tax of approximately Rfw2.2 million ($3,600) for each unit to RRA prior to being handed their title deeds.

Under the new agreement with Fina Bank, B&B Heritage will also be given 33.8 hectares of land in Kagugu located on the outskirts of Kigali, where it is expected to embark on a new real estate project.

The land initially belonged to two prominent Rwandan businessmen, Uzziah Iyamuremye and Paul Muvunyi, who had initially sold it to DN International but the developer failed to pay the full amount.

While the outstanding debt is estimated at Rwf100 million, following intense negotiations, the two businessmen agreed to a Rwf80 million ($166,000) payout, forfeiting Rwf20 million ($33,000).