(Kampala) – Jomayi Property Consultants, a major Ugandan real estate firm, has secured a temporary stay on liquidation after the Court of Appeal suspended a High Court order declaring the company insolvent. Jomayi’s owner, Joseph Magandazi, expressed relief as the order allows the company to continue operations while it challenges a sh868 million debt claim by NC Bank Uganda Ltd.
The High Court originally ordered Jomayi’s liquidation in April 2024 due to the outstanding debt. However, on November 12, 2024, Court of Appeal Justice Christopher Gashirabake ruled to temporarily block the order, agreeing that the company’s ongoing liquidation posed an “irreparable loss” risk if Jomayi’s appeal were successful.
The ruling was announced by Registrar Hellen Rukundo Owembabazi, who confirmed that attorneys Anthony Bazira and William Kasozi represented Jomayi and NC Bank, respectively, at the hearing.
Justice Gashirabake explained that liquidating Jomayi could permanently endanger the company’s operations, making it impossible to reverse damages even with financial compensation. The court found Jomayi’s appeal credible and agreed to delay the liquidation pending further legal review. Gashirabake also declined the bank’s request for a security payment, saying that the bank had not shown how enforcing the judgment would be hindered.
This decision follows extensive legal proceedings, starting in 2018 when NC Bank first pursued Jomayi over unpaid debts from a 2017 land purchase in Wakiso District’s Ssisa area. According to court documents, the dispute began when Jomayi defaulted on payments to NC Bank for a parcel of land worth sh1.5 billion. The bank initially foreclosed the land due to a separate borrower’s default and later sold it to Jomayi in an agreement that required six installment payments. Jomayi, however, reportedly made only partial payments, breaching the agreement and triggering a legal battle.
The legal process intensified in 2019 when NC Bank merged with the Commercial Bank of Africa to form NCBA Bank Uganda. During this period, NC Bank issued Jomayi a statutory demand under Uganda’s Insolvency Act, giving Jomayi 20 days to settle an outstanding sh868 million. Jomayi contested this demand, arguing that it had not been adequately informed about the bank’s name change and insisting it had intended to clear the debt.
Magandazi, through his legal team at Byenkya, Kihika and Company Advocates, contended that he was hindered by parties placing caveats on his properties, which impacted his ability to settle the debt.
The case hinges on Jomayi’s 2017 land deal with NC Bank. Initially owned by businessman John Baptist Ssemwogerere, the land on Block 410, Plot 20, was mortgaged to NC Bank before Jomayi agreed to purchase it. Jomayi’s failure to pay in full led NC Bank to sue in 2018, claiming unpaid amounts totaling sh1.1 billion.
In 2019, both parties reached an agreement under which Jomayi would settle its debts in 10 monthly installments. However, Jomayi allegedly failed to meet these terms, leading NC Bank to pursue liquidation under the Insolvency Act.
Under Ugandan insolvency law, liquidation can force a business to cease trading, with assets sold to repay creditors. Section 3 of the Insolvency Act allows this process as a debt collection measure. If successful, Jomayi’s appeal would reverse the liquidation order, allowing it to avoid asset sales and continue business.
