Crown Industries
Euromat and United Bank for Africa
Githunguri Dairy
High Court
Uchumi Supermarkets

Court cases hinder Uchumi turnaround

Operations at Uchumi Supermarkets have ground to a halt as legal suits by creditors stall turnaround efforts.

The disputes have weakened the retailer’s ability to cash in on the busy festive season, winding up another dismal year for Kenya’s pioneer chain store.

“Following various litigation matters concerning the solvency of the company and the lease agreement on Uchumi’s headquarters offices, the company has been unable to successfully conduct the financial audit for the year ended June 30, 2018,” said a statement from the board of directors.

Uchumi is currently fighting a legal battle instituted by creditors including Crown Industries, Euromat and United Bank for Africa that want the supermarket declared insolvent and its assets put under the hammer to repay debts.

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Other suppliers including Githunguri Dairy farmers, processors of the Fresha brand of dairy products, have twice failed to convince the High Court to wind up the retailer over more than Sh90 million in unpaid debts.

Uchumi has managed to stay afloat after obtaining a stay on its creditors and landlords who sought to have it evicted from some of its prime locations owing to unpaid rent.

It now says it has constituted a special committee to assist in identifying priority areas in need of strategic intervention to fast track the turnaround process.

“Uchumi Supermarkets’ board and management has put in place a team of external legal, accounting and retail consultants who will identify and advise on the best options available for the listed retail to settle its obligations as well as restructure the company’s liabilities,” said the statement.

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The team is further expected to present a proposal to the board detailing a “return to normalcy” restructuring plan that will see Uchumi restock, rebrand and return to full operation.

“Uchumi will engage its auditors and legal team to plan the process and confirm that the recommendations of the financial experts meet not only the threshold required but are sustainable,” said the board.

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