This archive report was first published on 15 December 2019.
Published on December 15, 2019, Nakumatt's comeback is uncertain after the closure of three branches in Nairobi and Kisumu.
Once the retail store of choice in the region, Nakumatt remains a pale shadow of its former self after huge debts wiped down its coffers, leaving it bankrupt.
Thanks to the new Insolvency Act, 2015, a broke Nakumatt was not liquidated but placed under a court-appointed administrator, in a move aimed at getting creditors maximum benefit.
However, this might also change. Proof of financial distress is now enough for suppliers to force liquidation of a company put under administration.
According to the Insolvency Act, courts can now look at, among other conditions, “the impact of the approval on the applicant particularly whether the applicant is likely to suffer significant loss.”
“Moreover, the proprietary interest of the applicant of the company takes precedence over those of the company,” reads part of the Bill proposing the amendments.
Distressed creditors now have an opportunity to seek for the liquidation of the company. However, it will be difficult for all of them to recover their money, Nakumatt’s liabilities are more than its assets.
Nakumatt’s court-appointed administrator, Peter Kahi, was in March given another shot at sorting out the mess at the troubled retailer following a year of frustrations by creditors.
Despite the locally-owned retailers having established long-running relationships with the suppliers including farmers, they have not been able to match newer entrants on pricing.
