Uchumi fighting a record 45 legal suits before Magistrate’s courts, the High Court and Tribunals

Troubled Uchumi Supermarkets  is banking on court protection to fend off multiple creditors who are scrambling to dispose of its assets to recover debts. The retail chain on Tuesday got big relief after it obtained court orders suspending all judgments, decrees, attachment of properties, or distress for rent against it until October 17 when Kiambu-based milk processor Githunguri Dairy Farmers Co-operative Society’s case will be mentioned. Githunguri Dairy moved to court last month seeking to wind up Uchumi over its failure to settle a Sh44.8 million debt, but the case has turned out to be a godsend for the retail chain whose response has resulted in the suspension orders. Uchumi has, in a petition filed in court, disclosed that it is fighting a record 45 legal suits before Magistrate’s courts, the High Court and Tribunals -- all arising from its inability to pay debts. “The company, its assets and stock are in desperate need of protection by this honourable court and unless there is immediate intervention, the company’s assets or stock will be disposed of to the detriment of the company as a going concern and the general body of creditors,” Judith Matata, Uchumi’s legal manager, told the court. Justice Mary Kasango, while issuing orders preserving the assets of Uchumi, also allowed the retail chain to inform the public of decision to preserve its assets in a daily newspaper of national circulation. Uchumi also promised to serve the papers and the orders on 63 companies, including 11 auctioneers. Court documents show that UBA Bank has asked Valley Auctioneers to seize and dispose of Uchumi land situated on Langata Road to settle a Sh172 million debt. UBA opposed granting of the orders stopping it from disposing of the land, arguing that its debt is secured and the process of selling the property had commenced. UBA Bank on September 24 issued a 45-day notice for sale of the land identified as LR No 209/12593 in Langata area. The list of creditors includes UAP Insurance, Tropikal Brands, Kings Wear Limited, African Cotton industries and Mumias Sugar Company. The court documents leave no doubt that Uchumi is a company under siege and over which creditors are scrambling to secure whatever goods they can find to recover outstanding debt. Sueng Enterprises, a company Uchumi owes Sh6 million has, for instance, identified one medium fridge, male and female lotions, display shelves, 10 cash registers, one generator and utensils as goods it wants Galaxy Auctioneers to sell in order to recover the debt. Other creditors have identified assets such as iron boxes, floor carpets, stationery and even food stocks for auction to recover their debt. Uchumi says allowing the auctions to continue while the insolvency case is ongoing will jeopardise any chance of redeeming the company as a going concern. Uchumi’s decision to use the insolvency suit as a shield against creditors signals a deepening of the retail chain's troubles even as it struggles to raise new capital to fund its operations. Uchumi has in recent months been forced to close some of its branches besides experiencing frequent stock-outs and failing to pay staff on time The petition comes less than two months after household goods company Tropikal Brands Afrika sued Uchumi Supermarkets for Sh35 million in unpaid supplies. Tropical Brands said in its petition that Uchumi had failed to settle the debts for up to five years, despite the credit period being fixed at 90 days from the date of supply. Uchumi has been struggling under the weight of debts and a cash crunch that has affected its ability to pay staff salaries on time. The retail workers’ union has previously said that non-payment of salaries, which began last December, had affected 1,355 employees. The retail chain, which owes suppliers over Sh3.6 billion, has been banking on the sale of land in Kasarani to turn around its fortunes but the money - estimated at Sh2.8 billion, has been slow in coming because of challenging approval processes. Source link