The collapse of two of East Africa’s largest retail chains in quick succession, coupled with the biting impact of the Covid-19 pandemic, have created the perfect concoction for failure at biscuit maker Britania, which is facing an insolvency petition under the weight of a Sh17.3 million debt.
Uzuri Foods Ltd, which supplied Britania Foods Ltd with flour between March and August 2019, wants the High Court to appoint Kolluri Venkata Subbaraya as the biscuit maker’s liquidator and give him the authority to sell assets as a debt recovery strategy.
The 34-year-old Britania admits owing the money in its response to the petition, but says it intends to employ a recovery strategy that will attract funding and enable it to repay debts.
Britania argues that retail giants Nakumatt and Tuskys collapsed while owing it more than Sh50 million, and that the Covid-19 pandemic has eaten away at its biggest client base – schools and hotels – that have suffered extended closures to curb the spread of the respiratory disease.
Documents in court indicate that Uzuri Foods is worried that Britania is selling off its assets and business, and wants the Sh17.3 million paid before the process is completed.
Britania does not deny the claim, but says it is seeking funding from investors to rejuvenate the business.
“The company’s other main consumers are schools and hotels which have been drastically affected by the Covid-19 pandemic hence making the company (Britania) to also face economic difficulties,” Britania says in court papers.
“The company is undergoing a restructuring of its operations and has even sought financial assistance in terms of cash injection from various investors with a view of improving its financial standing so as to meet its financial obligations including settling Uzuri Foods’ debt.”
Uzuri Foods says in the insolvency petition that it supplied biscuit flour and wholemeal to Britania between March and August 2019. Invoices attached as evidence indicate that the supplies were to be paid for within 30 days of delivery.
The principal debt owed is Sh14 million, while Sh3.3 million in interest has accumulated over two years.
Following a lot of back and forth between the two companies over the debt, Uzuri Foods sent a statutory demand to Britania on July 8, 2020.
Under Kenyan law, a creditor is allowed to issue a 21-day statutory notice to a company or individual that is unable to pay its debts for any reason. The document serves as an ultimatum to repay the debt claimed or agree to a payment plan with the creditor.
Once the 21 days lapse, the creditor is allowed to file a petition in a court seeking insolvency of the company or individual.
Uzuri Foods sent a second statutory notice to Britania, a move the supplier says was to ensure caution before taking drastic action such as filing an insolvency petition.
On September 4, 2020, Uzuri Foods sent a notice to Britania, demanding that the biscuit maker settle the debt, but no payment was made.
Uzuri Foods filed its insolvency petition against Britania on December 15, 2020 – five months after issuing the statutory notices.
“Uzuri Foods does not, nor any person on its behalf, hold any security on Britania’s assets for the said amount. Uzuri Foods has made repeated demands to Britania Foods for the payment of the debt but the company has failed/neglected/refused to pay the amount in debt,” Uzuri Foods says in the petition.
“Evidently, the company is insolvent and incapable of paying its debts as demonstrated by its failure to satisfy its debt as hereinabove illustrated.”
Britania, which started out as a small bakery, has been in operation for 34 years, during which it grew into one of Kenya’s biggest local brands.
It was registered as Jambo Biscuits but traded as Britania. Founder Nitin Dawda’s family sold the company to Kenyan-owned private equity firm Catalyst Principal Partners in 2016.
Catalyst is owned by businessman Paul Kavuma but is registered in Mauritius.
To complete the Britania purchase, Catalyst registered a new company in Mauritius, Jambo Africa Ltd.
Jambo Africa then registered a new company in Kenya, Britania Foods Ltd.
Documents from the Registrar of Companies filed in court indicate that Jambo Africa owns all the shares of Britania Foods.
Mr Kavuma is the only director of Britania Foods, while Conrad Nyukuri is the company secretary.
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