Kenya: Court Gives Uchumi Supermarkets 6 Months to Pay Sh4.7 Billion Debt

11 August 2020

Uchumi Supermarkets Ltd has been given six months to settle its Sh4.7 billion debts to over 100 suppliers or face auction of its assets by creditors and eviction by their landlords.

The retailer last week got a reprieve from the High Court, which marked an insolvency petition against Uchumi as settled and withdrawn following an out-of-court deal with suppliers.

Despite opposition from UBA Bank, Justice Mary Kasango allowed the implementation of a Company Voluntary Arrangement (CVA) that 121 suppliers agreed to in March.

Under the CVA, Uchumi's creditors will have to take a 70 per cent loss on amounts owed to them, and the retailer will be expected to put up a committee to ensure that debts are paid on time.


Justice Kasango allowed implementation of the CVA on condition that Uchumi pays all its debts within six months, and in turn, all money claims currently before court be suspended.

"In the event the company defaults... . A person may take steps to enforce a security over the company's property only with the consent of the supervisor or with the approval of this Honourable Court; A person may take steps to repossess goods in the company's possession under a credit purchase transaction only with the consent of the supervisor or with the approval of this Honourable Court... "

"... The company's landlords may exercise a right of forfeiture by peaceable re-entry in relation to premises let to the company only with consent of the Supervisor or with the approval of this Honourable court," the court papers read.

Should Uchumi fail to pay up within the six-month window, it could face death as eviction and repossession of stock will leave the retailer as a shell.


UBA had claimed at a creditors meeting in March that Uchumi falsely classified KCB and Cooperative Bank as secure creditors.

Secure creditors have a hold on assets as collateral, which can be auctioned to recover debts in the event of default.

UBA said it protested the misclassification of KCB and Cooperative as secure creditors but that the meeting's conveners proceeded with the move.

Justice Kasango in her ruling said that UBA did not provide any evidence to show that KCB and Cooperative do not have any collateral hence the claim of misclassification could not stand.

Creditors met Uchumi representatives in March, and 121 voted to implement the CVA while 28 opposed the move. Three votes were spoilt.

Those that voted yes have a total debt claim of Sh3.5 billion. This means they will only receive Sh1.05 billion, or 30 per cent of their debts.

The 'no' team has a combined claim of Sh1.18 billion, meaning they will settle for a Sh355 million payout. Those that had spoilt votes have a Sh3 million claim, and will receive Sh928,000.

Uchumi had pegged a large part of its revival plan on the sale of a 20-acre piece of land in Roysambu.

But KDF occupied the land in April, last year, insisting it was compulsorily acquired in 1985 for a military base.

Uchumi bought the land from Solio Construction, a company owned by the family of former President Daniel Arap Moi, in 1992.

Interestingly, records indicate that Solio Construction was incorporated in 1999 - seven years after it sold the land to Uchumi.


Uchumi in 2018 had agreed to sell the land to church-owned Jewel Complex Limited for Sh2.8 billion. The retailer received a Sh300 million deposit before the KDF forcefully occupied the land and planted a number of officers and an armoured tank at the property's entrance.

A previous attempt to sell the land has also come back to haunt Uchumi, as Sidhi Investments, a firm that was to purchase the property for Sh180 million still wants ownership.

Sidhi had paid a 10 per cent deposit before the sale was cancelled, but the firm sued and its case is still ongoing.

Uchumi has since been negotiating with the KDF to get the prime property back, after which the retailer will have to sort out its differences with Sidhi Investments.

An out-of-court deal has between Uchumi and Sidhi Investments has also been ongoing since last year.

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