Kenya’s largest retailer Nakumatt holdings has filed for Bankruptcy protection in the Kenyan courts a few weeks after Uganda Revenue Authority effectively halted its operations in Uganda.
An administration order is a legal status to protect a company from the threat of creditors’ actions.
If Nakumatt Uganda had filed a similar order in the Ugandan courts of law it would have secured its protection from the likes of URA, landlords and suppliers who were overwhelming the company with demands for payments.
Nakumatt says the primary aim of the order is to rescue the company as a going concern. Over this period, Nakumatt shall continue to trade normally.
High Court Judge Justice Joseph Onguto has ordered that the application for the order to be heard on 8th November 2017.
Under the insolvency laws of a number of common law jurisdictions, administration order is similar to bankruptcy protection in the United States.
The retailer has been struggling with massive debts amounting to more than Kenyan Sh30 billion. That is excluding the debts in Uganda.
“The directors of Nakumatt Holdings Limited (“Nakumatt”) have today (30/10/2017) applied to the High Court for an administration order in accordance with section 532(1)(b) of the Insolvency Act (2015) (“Act”).” The company said in a statement.
The firm has proposed that Mr Peter Kahi of PKF Consulting Limited be appointed as an administrator and will perform his functions in the interests of Nakumatt’s creditors.
The company described the order as a way to work with its creditors to get back on solid financial footing and invest in long-term growth in a difficult retail environment.
There are ongoing negotiations to merge Nakumatt with Tusky’s but the Ugandan operation seems to have ground to halt with villagers raiding their central store in Gayaza and pillaging it of good worth millions of shillings.