Nakumatt Holdings has begun lying off staff under claims of insufficient capitals to sustain their salaries.
The new administrator Peter Kahi has communicated with several shop attendants via text messages informing them to collect their dismissal letter.
The termination letter seen by the Star, and signed by Kahi, told shop assistants that their services would no longer be needed, as efforts to save the retailer continue.
“In my capacity as agent of the company, and in pursuit to section 40(2) of the Employment Act, 2007, I have reviewed the affairs of the company and regret to advise that there is insufficient available working capital to permit continued operations at former levels and consuequently it has become apparent that your functions as a Shop Assistant will unfortunately be abolished. Consequently, your services have been terminated as from 22 February 2018,” the letter advised.
“You will have a preferential claim arrears of wages/salary up to the date of my appointment, but not exceeding Sh200,000 of four months, whichever is lesser. In addition, your other dues will be calculated and you will be given an advice thereof. This claim will rank as an unsecured creditor of the company,” the company said.
For over 18 months, Nakumatt has faced financial burdens with an amounting debt of over Sh36 billion which has forced it to close tens of its branches in Kenya, Uganda and Tanzania in a span of 18 months. Its troubles have made to be on top of country economic storms, with stories been told by empty shelves, wrangled employees and devastated suppliers across its previous 66 branches.
Earlier this year, Nakumatt Holdings had welcomed a High Court decision that granted the supermarket chain administration orders to accelerate and complement ongoing recovery efforts and oversee the restocking of eight key branches in partnership with key suppliers.
Key branches that were restocked and enjoyed the benefits of the ruling included Nakumatt Mega, Nakumatt Prestige, Nakumatt Galleria, Nakumatt Lavington, Nakumatt Ukay, Nakumatt Ridgeways, Nakumatt Nakuru and Nakumatt Village.
In their petition to the High Court, four suppliers Primrose Management Sunmatt, Compulynx and Jade Concepts had proposed that Peter Obondo Kahi of PKF Consulting Limited be appointed administrator. It allowed immediate appointment of Kahi with directions for him to ensure that a creditors' meeting is convened within 60 days.
The former supermarket giant had turned to Tuskys Supermarkets for rescue but Competition Authority of Kenya rejected the proposed merger citing that the application was made under the wrong clause of the antitrust law. CAK commented that the transaction did not amount to a merger since Nakumatt’s ownership structure will not change upon the closure of the deal.
The agency advised the two retailers to make a fresh application or an exemption from regulations on anti-competitive behaviour rather than approval for the merger.