NAIROBI, Kenya, Oct 31 – Troubled retailer Nakumatt has applied for an administration order under the insolvency act.
In papers filed at the High Court, the directors of the Supermarket chain have proposed Peter Kahi of PKF Consulting Limited to be appointed as the administrator with a view of turning around the supermarket.
“Kahi is an experienced business turnaround professional and if the application is granted, Mr. Kahi will act as an independent administrator and perform his functions in the interests of Nakumatt’s creditors as a whole,” the directors say.
Nakumatt considers that the administration route provides it with the best opportunity to effectively restructure its business.
“Importantly, pursuant to section 560 of the (Insolvency) Act, while a company is under administration, there is a moratorium on certain legal processes, including a moratorium on enforcement of security over the company’s property or the exercise of a right of forfeiture by peaceable re-entry, without the consent of the administrator or the approval of the court,” states the statement by Nakumatt.
An administration, unlike bankruptcy, aims to rescue the company and gives more control to the directors who have the option of appointing an administrator.
Nakumatt, however, says the move has been necessitated by the need to protect the company, employees, lenders, landlords and suppliers who would suffer loss if the company is wound up.
“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,” continues the statement.
The firm still believes that it has a strong underlying sustainable core business that is capable of a turnaround with the support of all stakeholders.
Justice Joseph Onguto of the High Court has ordered that the application for administration be heard on November 8, 2017.