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December 11, 2018

Court to hear the Nakumatt insolvency case

The Diani Nakumatt supermarket.Photo Elkana Jacob
The Diani Nakumatt supermarket.Photo Elkana Jacob

The High Court will today hear whether the embattled Nakumatt Holdings will be on administration in insolvency case after they made a fresh application.

Nakumatt through their lawyers filed a new application before Justice Fred Ochieng in December, seeking administration order after the judge who was hearing the case disqualified himself.

Justice Joseph Onguto had dismissed their application saying that he was concerned that the level of indebtedness had not been clearly stated by Nakumatt.

"I am concerned and unable to ascertain if the company will maintain levels of trading as before," Onguto said yesterday.

Nakumatt had applied for an administration order proposing the appointment of Peter Kahi of PKF Consulting Limited as an independent administrator to perform his functions in the interests of its creditors. Karuri said if the company is put under an administrator, it will be able to come back on its feet and pay its creditors

“To benefit from liquidation will only be the secured creditors, as opposed to unsecured creditors. We want a solution which will benefit all the creditors alike," the company told court.

Justice Ochieng however told the parties in the case to agree before he makes his ruling on Friday.

The application of Nakumatt attributed part of their problems to the year-old Banking (Amendment) Act which put a cap on interest rates.

Nakumatt CEO Atul Shah said the enactment of the law severely restricted the supermarket’s ability to access key short to medium term financing that it relied upon to meet its obligations to creditors.

“It therefore became necessary for Nakumatt to negotiate fresh terms with financial institutions and repayment with its creditors owing to these unforeseen circumstances,” Shah said.

He said Nakumatt has made a lot of efforts to recapitalise business to overcome its current financial situation.

Lawyers representing Nakumatt asked Justice Ochieng to grant them leave to file further affidavits which contain guarantees and hope to settle the matter by today. However, lawyer representing landlords said not all landlords are willing to participate in the recovery. He added that Nakumatt should choose the premises to proceed with and those they do not require will be vacated by consent.

"The guarantees should be from reputable financial institutions", lawyers representing landlords said. The embattled retailer has faced many problems including lawyers withdrawing themselves from the case.

 

 

 

 

 

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