The court-appointment Nakumatt administrator Peter Kahi has protested at the manner the retail chain was evicted from its Nyali City Mall outlet in Mombasa.
Hired men descended on the store on Wednesday morning and carted out goods from the stores and shelves resulting in damages estimated to be over Ksh 300 million.
In a statement, Kahi said the move to evict them was against the law on firms under administration, which are protected against external interference or recovery action by any creditor during the term of the Administration.
Here is Kahi’s statement in full:
The attention of the Nakumatt Holdings Ltd “Nakumatt” Administrator has this afternoon been drawn to a regrettable and highly contemptuous action following the unilateral eviction of Nakumatt Nyali from its operating premises. This action is an absolute contempt of court as Nakumatt is currently under a Court sanctioned administration. To this end, I wish to remind all Nakumatt’s stakeholders of the following sacrosanct legal provisions cushioning the business from arbitral action:
- That in accordance with section 532(1)(b) of the Insolvency Act (2015) (“Act”), Nakumatt’s creditors applied and successfully secured Administration orders from the High Court. These orders were granted by Justice Fred Ochieng’ on 22nd January 2018.
- The Orders as granted provide specific safeguards to the business under Administration as per the provisions of the Insolvency Act 2015. Such provisions include protection against external interference or recovery action by any creditor during the term of the Administration. In essence, the Administration process is a court supervised initiative that seeks to guarantee a fair and just outcome for all creditors.
- The action by Ideal Location Ltd (The Landlord) by any other shade or form is draconian and occasions further unnecessary losses to a business currently under Administration. By placing the troubled business into Administration, the High Court had sought to facilitate and achieve a better outcome for its creditors as a whole than would likely be the case if the company were to be liquidated, principally because:
- the administration will enable Nakumatt to be maintained as a going concern. Nakumatt shall continue to trade and generate revenue to meet its ongoing financial obligations; and
- the administration and continued trading of the Company will provide an opportunity for the business to reassess its financial position and options for restructuring and the time to implement a business turnaround. Importantly, pursuant to section 560 of the Act, while a company is under administration, there is a moratorium on certain legal processes, including a moratorium against enforcement of security over the company’s property or the exercise of a right of forfeiture by peaceable re-entry, without the consent of the administrator or the approval of the Court.
I therefore take this opportunity to remind all Nakumatt’s creditors of the business status while pointing them to the provisions of the Insolvency Act 2015. All creditors are therefore notified and warned that they will be held responsible for damages and contempt of court for any action taken in the clear knowledge of the matters explained above. In this instance, I shall be swiftly moving to surcharge and effect the recovery of destroyed goods and property earlier housed at Nyali City Mall and valued at more than Kshs 300million.
Ideal Location Limited had on Tuesday secured orders from the High Court in Mombasa allowing them to evict Nakumatt Holdings due to Ksh 27.8 million rent arrears.
Justice Charles Yano said the troubled chain of supermarkets has failed to pay rent, service charges and promotion fund, saying the owners of the mall, were at liberty to evict the retailer.