A deserted Nakumatt Supermarket in Nyali, Mombasa. FILE PHOTO | NMG
Nakumatt’s creditors have rejected the supermarket’s bid to
appoint an administrator to run its business until it returns to
profitability arguing that liquidation is the only viable means of
getting the troubled retailer out of its misery.
The
creditors Tuesday told High Court judge Louis Onguto that they intend to
have the insolvency petition against Nakumatt determined with urgency,
going against the retailer’s Monday application to have an administrator
appointed to run the business.
Kakamega-based real
estate firm Holden Investments, which is leading the quest for
Nakumatt’s liquidation, told Justice Onguto that the proposal to have
creditors suspend for two months their demand for payment of their debt
was pegged on the promise of a Sh650 million bailout from Tuskys that is
neither detailed nor satisfactory.
Justice Onguto on
Tuesday granted all 90 creditors in the insolvency petition four days to
file responses to Nakumatt’s application for the appointment of PKF’s
Peter Obondo Kahi as the retail chain’s administrator.
Nakumatt
is suffocating under the weight of debt that is estimated to stand at
between Sh30 billion and Sh40 billion, and has sought the help of rival
Tuskys, which has expressed interest in buying a 51 per cent stake in
the struggling retailer and pump in Sh650 million for operational costs
as well as offer guarantees of up to Sh3 billion to suppliers.
Nakumatt’s
recent meeting with creditors to draw a roadmap for settlement of their
debt resulted in a stalemate after they argued that the retailer is
undeserving of more time to pay their debts.
The
retailer has been negotiating with creditors in the hope of getting them
to stop the liquidation proceedings and allow it time to recover
without much success.
Nakumatt
chief executive Atul Shah consequently convened a board meeting with
his sons, which elected the appointment of an administrator as the
surest way out of debt trap.
“It was noted that the
company’s creditors had taken a view that there has been no viable
proposal made for the repayment of their debts and they are unwilling to
give the company 60 days requested to make a proposal to the creditors
and intended to progress with the application for liquidation/winding
up,” Mr Shah told his co-directors at the meeting.
Nakumatt
has proposed Mr Kahi as the administrator, arguing that liquidating the
retailer will see unsecured creditors go home empty handed.
Unsecured creditors include landlords and suppliers.
Unsecured creditors include landlords and suppliers.
“The
assets of the company are not sufficient to pay all amounts owing to
creditors and if the company was to be liquidated at this point in time
it is likely that it would only be able to pay part of the amounts owing
to secured creditors, with any payment to unsecured creditors unlikely
to be provided for,” Mr Kahi says.
Should unsecured
creditors go empty handed, the list of the biggest losers would include
the Kenyatta family-owned Brookside Dairy which is owed Sh457 million,
and one of East Africa’s largest hygiene products
manufacturers—Chandaria Industries—which is claiming Sh353 million.
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