- Diamond Trust Bank will bear the highest brunt if the retailer is wounded up. The lender is owed Sh3.6 billion
- As the curtain falls on Nakumatt, the focus is now shifting on Uchumi Supermarket, yet another retailer on the verge of collapse.
Tomorrow may be the end of Kenya’s once biggest retailer as creditors meet to vote on its dissolution.
The meeting is coming just days after the administrator ruled out the possibility of resuscitating the retailer which owes creditor at least Sh39 billion.
Peter Kahi, the court-appointed administrator of the retail chain that went under in January 2018, had last week given creditors 72 hours to submit their claims, following an independent audit that cast doubt of the firm’s ability to return to profitability.
In the notice, Kahi said the creditors’ only meeting would formally end the Nakumatt brands should they support the liquidation plan.
Some of Nakumatt’s creditors expected at the meeting to be held at Visa Oshwal includes local lenders KCB Group, Standard Chartered Bank Kenya Ltd, Diamond Trust Bank Kenya Ltd, suppliers, and landlords.
Diamond Trust Bank will bear the highest brunt if the retailer is wounded up. The lender is owed Sh3.6 billion, which is more than half of the Sh6.9 billion Nakumatt owes local lenders.
Brookside Dairy Limited, on the other hand, leads the number of suppliers demanding over Sh10 billion from the financially strapped retailer.
The milkman is owed Sh457 million followed by Outstand Logistics Limited Sh415 million, Norkan Investments Sh338 million, New KCC Sh290 million while high-end furniture maker Redstar International closes the list of five highest owed suppliers at Sh261 million.
Kahi, who had hoped to follow the restructuring procedure by Kenya Airways that saw creditors’ debt converted into equity when he was appointed in January 2018 and added another year did not mince his words upon accessing the retailer’s books
‘’The administrator is of the view that it is likely to be difficult to attract an investor to inject the substantial amount of equity required to restructure Nakumatt Holding Limited’s balance sheet due to the current high degree of financial leverage,’’ Hahi said.
‘’In light of the foregoing, the administrator is of the view that pursuit of wounding up option is the most feasible in the case of Nakuamtt Holding Limited. This objective allows the administrator to liquidate whole of the business without taking on additional trading risks’’.
Several factors including hasty expansion plan, gross mismanagement, tax issues and massive internal losses perpetrated by some wayward directors are the main reasons behind the death of giant supermarket chains that dominated East Africa in 2017, an Independent audit report by Parker Randall has revealed.
The report released late last week, for instance, revealed that had lent its directors more than Sh1 billion in interest-free soft loans by the time it was placed under administration on January 22, 2018.
Despite the rot at the retailer, directors consistently gave the firm’s books a clean bill of health, ostensibly to mislead would-be potential investors.
There is also uncertainty over the firm's incorporation, with previous court documents indicating that the retail is domiciled in Mauritius under the name of Ebene Cybercity.
As the curtain falls on Nakumatt, the focus is now shifting on Uchumi Supermarket, yet another retailer on the verge of collapse.