The Mega Mall on Uhuru Highway which hosted Nakumatt Mega. Nakumatt owner owes lenders billions of shillings. www.businesstoday.co.ke
The Mega Mall on Uhuru Highway which hosted Nakumatt Mega. What is eating the Kenyan retail sector? Why are big retailers collapsing? {Photo: Business Daily}

Ex Nakumatt CEO’s money woes are seemingly far from over as he struggles through the hangover of having to close down the supermarket chain.

A Rwandan bank has come to add to Mr Atul Shah’s money woes as it seeks to recover the money it lend the chain supermarket two years ago. Shah is already struggling to pay up the billions of shillings he owes Kenyan banks.

I&M Bank Rwanda Limited is looking to recover close to Sh 100 million from Shah after a Nairobi High Court judge ruled in favour of the bank. In his ruling, Justice David Majanja sad the bank had satisfied conditions for the judgement it had been granted by a Rwandan court to be recognised in Kenya.

The Kigali court that ruled in favour of the lender made judgement in April 2019 for the bank to recover Rwandan franc 932,497,198 (about Sh98.88 million). This was after the court upheld an earlier ruling by the commercial court.

Among the loans Shah guaranteed to Nakumatt Rwanda was one in the region of Rwf 1, 053, 450,610 ( Sh 111,649,480) on January 19, 2018. The former boss had promised to pay “without complications” in case Nakumatt defaulted.

Insolvency proceeding had already commenced against the supermarket chain in Rwanda, In his defence, Shah said that the bank should wait for the outcome of the proceedings before recovering the debt. An administrator had been appointed by the court who would ascertain all loans borrowed by the supermarket.

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He also added that he no longer had powers over Nakumatt and that he did not know the status of the loans.

However, the Rwandan bank said that insolvency proceedings pending in court can not prevent them from prosecuting the guarantor (Atul Shah) separately. The court heard that Nakumatt was over-indebted and was not in a position to repay the debts.

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The court agreed with the bank noting that nothing could have prevented the lender from bringing action against Shah. The ex Nakumatt CEO had pledged to pay even if insolvency or recovery proceedings had commenced.

Kenyan Debts

In Kenya, real estate properties worth Sh 3.68 million which are linked to the retail chain’s former CEO and his family are on the verge of being seized. The properties were identified by banks owed billions of shillings by Nakumatt.

The assets include shopping malls, office blocks and prime land in Nairobi, Mombasa and Nakuru. Most of these properties are owned by third parties linked to the Shah family.

The creditors, who include banks, suppliers and landlords, are owed Sh38 billion and the administrators will share out about Sh422 million that was raised from the sale of six Nakumatt branches to Naivas.

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Kevin Namunwa is a senior reporter for Business Today. Email at [email protected]

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