A tussle is ensuing between Uchumi Supermarket and its creditors over Ksh3.6 billion it (Uchumi) owes to them.
The retailer has given the creditors two options, either take 30 percent of what they owe it, or risk losing all their money. This means that the creditors are juggling between losing all their money, take Ksh1.2 billion and forfeit over Ksh2.4 billion or hold on to the liquidation case in court of the retailer.
In court papers, Uchumi says that if creditors decide to go the liquidation way, the assets owned by the supermarket may be not enough to repay all the debts.
The retailer also argues that the debts might go down, after a verification and reconciliation exercise with the creditors.
“It is believed that the verification will result in reduction of the amounts owed, thereby paving way for negotiation to obtain a 70 percent discount on the final agreed payable amount,” says Owen Koimburi, Uchumi’s new provisional supervisor.
In case the court gives a nod, Uchumi is planning a creditors’ meeting on April 23 to convince them to board the Company’s ‘Voluntary’ Arrangement (CVA) for the ‘discount’.
The court papers read, “The directors have indicated that it is only under the CVA where the creditors will expect to recover a portion of their debts. If the proposal is rejected by the company’s creditors, the likely effect is that the company will enter into liquidation”.
A liquidation motion was filed in court in Sepptember 2018 by Githunguri Dairy Cooperative Society which is seeking to recover Ksh44.8 million owed by the retailer.
Other creditors Uchumi owes include UBA (Ksh172 million), Uchumi Staff Provident Fund Trustees (Ksh122.7 million), New KCC (Ksh89 million), Chandaria Industries (Ksh68.7), Euromart (Ksh67.5), Colgate (Ksh45.5 million), Taroni Holdings (Ksh45.1), Securitas Ltd (Ksh39.9 million) and Interconsumer Products (Ksh38.2 million).
Uchumi also owes Tropikal Brands Afrika Ksh35 million, Manji Food Industries Ksh18.6 million, Kapa oil Refineries Ksh15.3 million, Equitorial Nut Processors Ksh21.3 million, Leading Locks Ksh12.8 million, L’oreal EA Ksh9.6 million, Insyc Solutions Ksh8.4 million, Professional Marketing Services Ksh4 million, Honey Care Ksh2.8 million and Connect IT Ltd Ksh1.4 million.
The creditors, through the Kenya Association of Suppliers (AKS) have objected Uchumi’s proposal of the VCA.
“We will not agree to that (plan), we want full payment,” said AKS chairman Mr Kimani Rugendo as quoted by Business Daily.
Currently, Uchumi is involved in over 45 litigations with its suppliers while 30 creditors a=have joined the liquidation case.