Creditors of Kenyan supermarket chain Nakumatt vote to wind it up

Reuters | Creditors of Kenya’s Nakumatt supermarket chain, once a leading regional retailer, voted on Tuesday to wind it up over an inability to pay its debts after a failed rescue attempt, its administrator said.

Nakumatt, which expanded from a mattress shop in a rural town to have branches across Kenya and East Africa, was forced to shut more than a dozen outlets in 2017 as it struggled to pay its suppliers, landlords and other creditors.

A Kenyan court granted Nakumatt Supermarkets protection from its creditors in 2018, allowing what was once Kenya’s biggest retailer to go into voluntary administration.

The High Court also approved Nakumatt’s application to appoint Peter Kahi as an administrator. The company hoped that Kahi, who works with Nairobi consultancy PKF and has experience turning around distressed businesses, would revive its fortunes.

But on Tuesday, Kahi recommended that creditors vote to liquidate the chain.

He said 92 percent of those who voted, representing debts worth Ksh16 billion (US$158 million), backed the liquidation.

The troubles at Nakumatt and another retailer Uchumi have opened the door to other local chains like Naivas and Tuskys to expand and foreign chains such as France’s Carrefour to operate franchises in Kenya. Kahi had been expected to manage the settling of debts estimated at more than US$300 million and try to revive a slimmed down version of Nakumatt with about 20 stores, down from 62 stores (all over East Africa) at its peak.

When the company sought protection in October 2017, it had 4,000 staff, but it has closed several outlets since then.

“With the administration process here in Kenya, you spend more money throwing good money after bad,” said one creditor who supported the winding up of the company.

Nakumatt had sought protection using Kenya’s newly enacted company laws, which provide a pathway for distressed firms to avoid collapse.