NAIROBI (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.
A general view shows the entrance to the Nakumatt supermarket within the Village market complex mall, in Nairobi, Kenya, November 7, 2017. Picture taken November 7, 2017. To match Insight KENYA-RETAIL/ REUTERS/Thomas Mukoya
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% of those who voted, representing debts worth 16 billion Kenyan shillings ($158 million), backed the liquidation.
The troubles at Nakumatt and another retailer Uchumi have opened the door to foreign chains such as France’s Carrefour to operate franchises in Kenya, and for other local chains like Naivas and Tuskys to expand. Kahi had been expected to manage the settling of debts estimated at more than $300 million and try to revive a slimmed down version of Nakumatt with about 20 branches, down from 62 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.
($1 = 101.1500 Kenyan shillings)
Reporting by Duncan Miriri; Writing by George Obulutsa; Editing by Kirsten Donovan and Mark Potter