Creditors of Kenya’s Nakumatt supermarket chain, once East Africa’s biggest retailer, voted on Tuesday to wind it up after it was unable to pay debts following a failed rescue attempt.
Nakumatt expanded from a mattress shop in a rural town to a network of more than 60 branches before a cash crunch forced it to shut more than a dozen outlets in 2017 when it was unable to pay suppliers, landlords and other creditors.
Poor management, rapid expansion and a flood and militant attack at two separate stores all hurt the chain, opening the door for foreign chains such as France’s Carrefour and South Africa’s Shoprite to enter the market.About 92% of creditors who voted backed the liquidation.
Pater Kahi, who was appointed as an administrator in 2018, said creditors had no choice but to back receivership. Liquidation allows suppliers to indirectly recoup up to 46% of the value of their debt through tax refunds, he said.
Nakumatt owes more than 30 billion shillings ($296 million): 18 billion to suppliers, 4 billion to commercial paper holders and the rest to banks.
The banks may go after the assets of individual directors of Nakumatt, Kahi said, and are considering hiring a private investigator to track down directors’ assets.
Kenyan police are also investigating potential fraud, he said, adding a forensic audit had not yet been carried out because there were no funds for it. The audit would cost at least 40 million shillings, he said.
Police did not respond to calls seeking comment, while Nakumatt’s former management could not be reached for comment.
“The guys who will walk home with zero are the commercial paper holders,” Kahi said.
Kimani Rugendo, chairman of the Suppliers Association of Kenya, which represents more than 1,500 members, said Nakumatt owed his juice-manufacturing firm Kevian close to 100 million shillings. He wants a forensic audit.
“I still don’t believe all these billions really went into a loss as it was declared,” he said. “It is an inflated loss, a man-made loss, and we should know where they took all the money.”
“Our hope has been for a revival and to get at least our money back in the long run, at least 80%,” he said.
Kenya enacted new regulations last year compelling retailers to pay suppliers within 90 days.
Rugendo said that was “a step in the right direction.”