Co-Op Bank Kenya Issues Sale Notice over Sony Sugar Debt

In Short

• Co-Op Bank Kenya has issued a 40-day statutory notice to recover an unpaid loan from South Nyanza Sugar Company, also known as Sony Sugar.
• The bank says Sony Sugar owes KSh862.3 million as of July 14, 2026.
• If the debt is not cleared within the notice period, the bank plans to sell a charged property tied to the loan.

What Happened

Co-operative Bank of Kenya has moved to enforce security on a Sony Sugar property after the sugar miller defaulted on a lending facility.

The lender issued a 40-day statutory notice. This is a formal legal warning required before a lender can sell collateral, meaning an asset pledged for the loan. The notice targets Land Reference No. 16339/1, which the bank says is registered in Sony Sugar’s name.

The bank says the outstanding amount is KSh862,328,980.41 as of July 14, 2026. It also referenced an earlier statutory demand notice dated August 13, 2025, often called a 90-day notice. In Kenya, the Land Act, 2012 sets the steps lenders must follow before selling charged land when a borrower remains in default.

Co-Op Bank also said the loan is backed by a “first ranking all asset debenture.” This is a legal claim over a borrower’s assets, similar to putting a blanket lien over business property and equipment, and it ranks first ahead of other claims.

The lender added that any repayments or new repayment arrangements after the latest notice would be received “on account,” but would not stop enforcement unless the default is fully cured.

Why It Matters

For lenders, this case shows how banks are relying on secured lending and formal enforcement processes to manage credit risk, especially when large corporate borrowers miss payments.

For businesses, it is a reminder that collateral-backed loans can quickly escalate into asset sales once statutory notices run out. That risk can affect operations, supplier confidence, and access to new credit.

For the wider market, court-backed enforcement under the Land Act helps preserve confidence in Kenya’s credit system, but it can also raise scrutiny on how distressed companies restructure debt before assets are auctioned.