I&M Rwanda pursues ex-Nakumatt CEO over Sh99m loan

Former Nakumatt chief executive officer Atul Shah. FILE PHOTO | NMG 

By SAM KIPLAGAT
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Summary

• The court heard that Mr Shah had guaranteed several loans given to Nakumatt Rwanda and agreed that in the event Nakumatt defaulted he would pay, prompting the lender to file the case against him.
• In Kenya, banks owed billions of shillings by Nakumatt Supermarkets have identified 11 real estate properties worth Sh3.68 billion that are linked to the retail chain’s former CEO and his family for possible seizure.
• The creditors, who include banks, suppliers and landlords, are owed Sh38 billion.

A Nairobi High Court judge has allowed I&M Bank Rwanda Limited to recover close to Sh100 million from former Nakumatt chief executive officer Atulkumar Maganlal Shah, signalling more trouble for the fallen giant supermarket chain.

In his ruling, Justice David Majanja said the bank had satisfied conditions for the judgement granted to the lender by a Rwandan court to be recognised in Kenya.

He noted that he was satisfied that Mr Shah had participated in the proceedings before the High Commercial Court in Kigali.

The court heard that the Kigali court had entered a judgement in favour of I&M Bank Rwanda in April 2019, for the lender to recover Rwandan franc 932,497,198 (about Sh98.88 million). This was after the court upheld an earlier ruling by the commercial court.

Justice Majanja heard last week that the bank had obtained the judgement from a "reciprocating country" and therefore should be allowed to enforce the ruling because Mr Shah had refused to pay.

Documents filed in court showed that on November 15, 2018, the bank obtained the judgement before a commercial court in Kigali for the sum of Rwf933,497,198 (Sh98.99 million). The court further ordered Mr Shah to pay lawyers’ fees of Rwf600,000 and Rwf100,000 respectively for costs of proceedings, all totalling to Rwf932,497,198 (Sh98.88m).

Mr Shah later filed an appeal but it was dismissed by High Commercial Court judge Kibuka M. Jean-Lue, who also increased the lawyers’ fees to Rwf900,000 (Sh95,319).

The court heard that Mr Shah had guaranteed several loans given to Nakumatt Rwanda and agreed that in the event Nakumatt defaulted he would pay, prompting the lender to file the case against him.

Among the loans he guaranteed to Nakumatt Rwanda was one to the tune of Rwf1,053,450,610 (about Sh111,649,480) on January 19, 2018. The former CEO had promised to pay "without complications" in case Nakumatt defaulted. The court further heard that insolvency proceedings were commenced against the supermarket chain in Rwanda.

Mr Shah defended himself, saying that the bank should await the outcome of the proceedings because an administrator had been appointed by the court and who would ascertain all loans borrowed by the supermarket. He added that a report would be submitted in court and a recovery plan made.

He further argued that he no longer had powers over Nakumatt and that he did not also know the status of the loans.

However, the bank said the fact that insolvency proceedings were pending could not prevent the bank from prosecuting the guarantor separately. The court heard that Nakumatt was over-indebted and was not in a position to repay the debts.

The court agreed with the lender, saying there was nothing that could have prevented the bank from bringing action against Mr Shah, because he had pledged to pay even if insolvency or recovery proceedings had commenced.

In Kenya, banks owed billions of shillings by Nakumatt Supermarkets have identified 11 real estate properties worth Sh3.68 billion that are linked to the retail chain’s former CEO and his family for possible seizure.

The assets include shopping malls, office blocks and prime land in Nairobi, Mombasa and Nakuru, where Atul’s father started Nakumatt as a retail shop.

The properties are owned by third parties linked to the Shah family, which owns the bulk of Nakumatt shares, according to a document prepared by the retail chain’s court-appointed administrator. The creditors, who include banks, suppliers and landlords, are owed Sh38 billion and the administrators will share out about Sh422 million that was raised from the sale of six Nakumatt branches to Naivas.