KAMPALA, Uganda | The Court of Appeal of Uganda has intervened to temporarily save one of Uganda’s most recognized real estate companies, Jomayi Property Consultants Limited, from the brink of liquidation. In the ruling delivered by Justice Christopher Gashirabake, the Court granted a stay of execution, pausing the High Court’s orders that sought to wind up the company and appoint a liquidator. This decision comes as a significant relief to Jomayi and its stakeholders, but it is only a temporary reprieve as the company continues its uphill battle to appeal the High Court’s ruling.

The legal battle stems from a statutory demand issued by NC Bank Uganda Limited in January 2020, seeking repayment of UGX 868,250,000 from Jomayi Property Consultants. The debt issue escalated when Jomayi failed to satisfy the demand, prompting NC Bank to file a Company Cause seeking the winding up of Jomayi and the appointment of a liquidator. This was followed by a consolidation of cases, with the High Court ruling in April 2024 in favor of NC Bank, paving the way for liquidation proceedings to commence.

Jomayi, once a beacon of hope for middle-class Ugandans aspiring to own land, now finds itself at the mercy of its creditors, facing the grim reality of insolvency. The company, which once prided itself on delivering affordable land and housing, has seen its fortunes dwindle, and the prospect of liquidation threatens to mark the end of an era in Uganda’s real estate sector.

In a bid to stave off the liquidation, Jomayi’s legal team, led by Mr. Bazira, filed an application to stay the High Court’s orders, arguing that the appeal has a reasonable likelihood of success. They contended that winding up the company before the appeal is heard would cause irreparable damage and render the appeal meaningless. Justice Gashirabake, recognizing the urgency and the potential harm to Jomayi, agreed to grant the stay.

“The winding up of a company has implications far beyond financial loss,” noted Justice Gashirabake in his ruling. “The appointment of a liquidator would effectively end the existence of the applicant, an outcome that cannot be adequately compensated in damages.”

At the heart of this case lies a contentious issue: is Jomayi Property Consultants truly insolvent, or can it still turn its fortunes around? NC Bank, represented by Mr. William Kasozi, argued vehemently against the stay, insisting that Jomayi’s financial struggles are undeniable. Kasozi pointed to the company’s failure to satisfy the statutory demand and its ongoing inability to provide title deeds to numerous land buyers as evidence of its insolvency.

The Bank’s counsel also raised concerns about alleged mismanagement and irregularities within Jomayi, likening the company’s operations to a Ponzi scheme. This accusation, if proven true, would not only tarnish the company’s reputation but could also warrant a deeper investigation by a liquidator. However, Jomayi’s counsel countered these claims, maintaining that the company operates a legitimate business and that the allegations are unfounded and speculative.

In his ruling, Justice Gashirabake emphasized the importance of preserving the status quo while the appeal is pending. He acknowledged that the Applicant had raised significant legal issues that warranted a full hearing, and that proceeding with liquidation would effectively silence Jomayi’s right to appeal.

The Court further declined to order Jomayi to provide security for due performance, a request made by NC Bank. The judge reasoned that the Respondent had not shown how it would be prejudiced if the stay was granted, given that it could still claim as a judgment creditor if the appeal fails.

While the ruling offers Jomayi a temporary reprieve, it does not signal the end of the road. The company must now prepare for the substantive appeal, where it will need to convince the Court of Appeal that it has the financial capability to turn its business around. This uphill legal battle will be closely watched by creditors, investors, and the thousands of Ugandans who have bought plots of land from the company.