Creditors have announced their decision to dissolve the former giant retailer Nakumatt on Tuesday formally ending the Nakumatt brand. The dissolution decision was supported by almost 97 percent of the 169 creditors present at the meeting in Nairobi.
The creditors were of the view that any attempt to turnaround the business would be very costly and “would need to be financed by additional debt to sustain operations before achieving break-even,” said the notice on creditors’ voting.
The Supermarket chain, started as a mattress shop in Nakuru in 1987 grew into a leading retailer with branches across Kenya and East Africa. Nakumatt has played a significant role in Kenya’s urban development particularly Nairobi through the construction of upscale malls As of December 2015, Nakumatt had 65 stores in Kenya, Uganda, Rwanda, Tanzania, etc employing over 5,500, with gross annual revenue of more than US$450 million. In October 2017 the company ran into deep financial trouble and was unable to meet its financial obligations to landlords, suppliers, and staff. An administrator was appointed to help it re-gain financial footing. However, in December 2019 the retail chain sold the last six branches. The Supermarket owes its creditors such as banks, suppliers, landlords etc an astounding sum of Sh38 billion. The administrators will share out about Sh422 million that was raised from the sale of six Nakumatt branches to Naivas.
A liquidator will be appointed to follow up with firms and individuals that owe Nakumatt and pay off secured creditors, including banks. Banks are planning to hire a private investigator to trace and identify assets linked to former chief executive Atul Shah who reportedly was responsible for the huge loss of billions of shillings at the stores. According to sources, Mr. Shah and his son, Ankoor Shah, failed to refund interest-free loans amounting to Sh1 billion from the retail chain. Mr. Shah is also held responsible for writing off stock worth Sh18 billion in May 2018.
