Retailer Nakumatt Holdings has welcomed a High Court ruling, granting administration orders in respect to the firm and issued on Monday 22, January 2018.
The order granted by High Court Judge Fredrick Ochieng follows a petition by four Nakumatt suppliers seeking administration rights as part of a business recovery plan for the retailer.
The legal development now provides a much needed relief for suppliers among other partners to resume supplies with customers also set to enjoy a revamped Nakumatt.
Speaking when he confirmed the retailer’s position on the matter, Nakumatt Holdings Managing Director,Atul Shah said the firm would comply with the High Court orders to ensure business sustainability.
While welcoming the ruling, Shah, noted that the administration orders will serve to accelerate and complement ongoing recovery efforts that have already seen the restocking of 8 key branches in partnership with key suppliers.
Key branches already restocked and beginning to enjoy better footfall include: Nakumatt Mega, Nakumatt Prestige, Nakumatt Galleria, Nakumatt Lavington, Nakumatt Ukay, Nakumatt Ridgeways, Nakumatt Nakurua nd Nakumatt Village Market.
“The granting of the orders comes as a welcome relief as it will allow the business to accelerate ongoing recovery efforts particularly branch restocking and related efforts that are currently underway,” Shah said, adding that, “We shall strictly comply with the orders and commit to provide the necessary co-operation to the independent administrator.”
In their petition to the High Court, the four suppliers Ms. Primrose Management Ltd, Sunmatt Ltd, Compulynx Ltd and Jade Concepts had proposed that Mr. Peter Obondo Kahi of PKF Consulting Limited be appointed as administrator.
In the ruling delivered earlier today, the High Court allowed the immediate appointment of Mr. Kahi with directions for him to ensure that a creditors meeting is convened within 60days.
“it is hoped and expected that the administration order, if properly executed will be beneficial to all the creditors,” Justice Ochieng noted in the ruling.
With the granting of the orders, Mr. Kahi, an experienced business turnaround professional will act as an independent administrator and perform his functions in the interests of Nakumatt’s creditors as a whole.
The administration order in relation to Nakumatt will enable the firm achieve a better outcome for its creditors as a whole than would likely be the case if the company were to be liquidated, principally because:
- the administration will enable Nakumatt to be maintained as a going concern. Nakumatt shall continue to trade and generate revenue to meet its ongoing financial obligations; and
- the administration and continued trading of the Company will provide an opportunity for the business to reassess its financial position and options for restructuring and the time to implement a business turnaround. Importantly, pursuant to section 560 of the Act, while a company is under administration, there is a moratorium on certain legal processes, including a moratorium against 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.
Last year, Nakumatt management had expressed apprehension that in the absence of an administration order, there would have been a significant danger of the firm being wound up with the, its employees, lenders, landlords and suppliers standing to suffer significant losses, with a broader impact on thousands of farmers, small businesses and traders whose livelihoods are dependent on the business.
Notwithstanding the current state of the business operations, Nakumatt still believes that it has a strong underlying sustainable core business that is capable of a turnaround with the support of all stakeholders. Nakumatt considers that administration provides it with the best opportunity to effectively restructure its business.