Caught between a rock and a hard place, cash strapped retailer Uchumi wants its creditors (suppliers and banks) to write off 70% of its total debt which amounts to Ksh3.6 billion with the supermarket chain offering them just one other bitter alternative, to lose all their money.
Documents filed in court, Business Daily reports, show that the retailer is in a perilous financial position and its recovery plan hinges mainly on the creditors forfeiting the debt.
So dire is the situation that even if the retailer’s assets were liquidated, the money raised would not be enough to service the debt that accrued when things started falling apart for the once glorious retailer up until now when it is in the danger zone.
The documents also claim that the total claims made against the creditor will only be revealed after reconciliation with the creditors.
“It is believed that the verification will result in reduction of the amounts owed, thereby paving way for negotiations to obtain a 70% discount on the final agreed payable amount,” reads the report signed by Owen Koimburi, Uchumi’s new provisional supervisor.
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The provisional supervisor was brought on board to oversee the implementation of the Company’s Voluntary Arrangement (CVA), a blueprint for the company’s recovery.
Uchumi wants the court to grant it permission to set up a meeting with the creditors where the CVA will be discussed.
The suits against Uchumi were filed hot in the heels of the winding up of a petition filed against the retailer by Githunguri Dairy Farmers Co-operative Society in September 2018, which sought to liquidate Uchumi over a Ksh44.8 million debt.
Uchumi’s suppliers however have flatly rejected the proposal floated by the retailer.
Association of Kenya Suppliers chairperson, Kimani Rugendo has dismissed the proposal as a ‘nonstarter’ saying that it is ‘unlikely to bring the suppliers to the table’.
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Uchumi has thus far relied on the winding up petition filed by Githunguri Dairy Farmers Co-operative Society to keep the different sets of creditors seeking the retailer’s liquidation at bay.
The retailer is battling 45 different cases at the Magistrate’s Courts, the High Court and tribunals over failure to pay the debts. Over 30 companies have so far joined the winding up petition filed by Githunguri Dairy.
Some of the companies Uchumi is indebted to include New Kenya Co-operative Creameries (Ksh89 million), Colgate Palmolive (Ksh45.5 million), Manji Food Industries (Ksh18.6 million).
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