Following Nakumatt’s on-going battles with suppliers and landlords who demanded the liquidation of assets to recover their monies or rent arrears, a Kenyan court granted Nakumatt Supermarkets protection from its creditors.
Kenya’s largest supermarket chain, Nakumatt closed more than a dozen branches in Kenya, Uganda and Tanzania due to its inability to pay suppliers, creditors and landlords over 30 billion Kenyan shillings ($289 million) it owes in debt.
To avoid further liquidation, Nakumatt applied to appoint Peter Kahi—who works with a Nairobi consultancy and has experience of turning around distressed businesses—as an administrator to the supermarkets. The judgement upheld Nakumatt’s application letter to go into voluntary administration.
Kai is expected to manage the settling of debts estimated at more than $300 million, succeed at reviving the business which has reduced to about 20 branches, down from 62 at its peak.
The decision to appoint an administrator is based off Kenya’s newly enacted company laws which provide a pathway for distressed firms to avoid complete collapse.
Judge Fredrick Ochieng stated that “It is hoped and expected that the administration order, if properly executed will be beneficial to all the creditors”. Meanwhile Nakumatt welcomed the ruling saying it had a “strong underlying sustainable core business that is capable of a turnaround with the support of all stakeholders”.