Troubled supermarket chain Nakumatt applied for voluntary administration to enable the chain to continue operations while freezing a mounting series of claims from banks, mall landlords, suppliers and other creditors as they seek options on how best to survive.
The move effectively ends the management of Atul Shah and surrenders decision-making at Nakumatt to Peter Kahi of PKF Consulting. One of the first orders of business of the company in administration will be for Kahi to draw and publish a statement of Nakumatt’s assets and debts while separating bank ones, preferential creditors, unsecured creditors, and connected creditors. Up to now, the true and total debt has been a matter of speculation that could be up to Kshs 30-40 billion.
The Nakumatt statement reads that “the senior lenders are aware of Nakumatt’s financial position and are supportive of Nakumatt’s application for an administration order. Further, Tusker Mattresses Limited has, subject to the Competition Authority of Kenya’s approval, undertaken to forge ahead with its investment in Nakumatt in connection with its proposed merger with Nakumatt.”
Past funding proposals prior to the Tuskys deal under consideration have not materialized. The insolvency law, which Nakumatt cites in its application for administration is among a series of new corporate laws passed in 2015 and is now focused on bringing troubled companies back to life. Aspects of the laws have been used at distressed companies including Uchumi and Kenya Airways. Going into administration lowers the voting powers of banks, who are secured, and it gives Nakumatt power to deal with the unsecured debts. The banks themselves were legally prevented from appointing an administrator as there have already been cases filed by some creditors asking for the liquidation of Nakumatt.