Nakumatt collapses after creditors vote for liquidation

Nakumatt creditors on Tuesday voted unanimously to dissolve the once giant retailer after efforts to revive the supermarket chain failed.

The creditors including banks, suppliers and landlords are owed Sh38 billion.

The court will decide on the liquidator on January 17, marking the formal end of the Nakumatt brands.

The liquidation plan was presented by Peter Kahi, the court-appointed administrator of troubled retail chain, in the creditors’ only meeting on Tuesday.

“An attempted turnaround of the business would be very costly and the company is likely to be lossmaking for the better part of the turnaround window, implying that such a turnaround would need to be financed by additional debt to sustain operations before achieving breakeven,” Mr Kahi said last week.

“The company also has no assets to collateralise such additional funding. The administrator is of the view that it is likely to be difficult to attract an investor to inject the substantial amount of equity required to restructure NHL’s balance sheet due to the current high degree of financial leverage.”

Nakumatt went into voluntary supervision in early 2018 after seeking protection from its creditors.

Nakumatt, which grew from a mattress shop in Nakuru to have branches across Kenya and East Africa, was forced to shut dozens of outlets from 2017 as it struggled to repay its suppliers, landlords and other creditors.

By February 2017, it had 60 branches that dropped to six in September 2018.

The six branches were sold to Naivas in a deal worth Sh422 million in November.

Its sales dropped Sh1.9 billion in the year to February down from Sh51.9 billion in a similar period in 2017.

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