Regulatory filings indicate that Nakumatt owed DTB Bank Sh3.6 billion, Standard Chartered Sh900 million, KCB Sh1.9 billion, Bank of Africa Sh328 million, UBA Sh126 million and GT Bank Sh104 million.
In its heyday, the company, which began life as Nakuru Mattresses, had more than 60 outlets across Kenya, Uganda, Tanzania and Rwanda, before it was brought down by poor management and debt-fuelled rapid expansion.
However, its financial problems led to empty shelves and store closures that eventually culminated in the demise of the once leading supermarket chain.
Foreign investors could have helped overhaul management and injected cash, but despite a swarm of suitors, no deal was made in the end.
KCB Group's #ticker:KCB move to auction a prime property belonging to the chief executive officer of the fallen retail giant Nakumatt, Atul Shah, has triggered a vicious fight that has sucked in three other banks staking a claim to the property.
Mr Shah, through his firm Collogne Investments Ltd, has accused KCB of mischief, arguing that the Sh2 billion asset is also charged to four banks, including Bank of Africa, DTB Bank #ticker:DTK and Standard Chartered #ticker:SCBK.
He reckons that the bank has breached a consent deal agreed among lenders that placed on ice the auction pending a ruling in the Court of Appeal, where Bank of Africa is fighting to sell the same property.
“The applicant urges this court to consider whether it is necessary to sell the charged land for recovery of the money owing,” says Atul’s son Ankoor Shah, a director of Collogne Investments,
in an affidavit.
“Has the bank made all reasonable efforts, including the use of all other remedies available? This court should stop the planned sale.”
In August, Bank of Africa got the court’s nod to auction Mr Shah’s personal property over loans offered to the collapsed retailer, but the former Nakumatt boss blocked the sale at the Court of Appeal.
KCB argues that it is not party to the Court of Appeal suit and that its absence in the case does not block it from selling the land.
Nakumatt owes Stanchart and DTB Bank a combined Sh4.5 billion and court documents show that they are also eyeing the Sh2 billion property.
The banks offered Nakumatt billions of shillings on the strength of the retail chain’s cash flow.
But Mr Shah used his company Collogne Investments, which owned the Sh2 billion property in Nairobi, as Nakumatt’s guarantor to offer additional comfort to the multiple bank loans.
The banks are racing to seize assets linked to Mr Shah and his family to recover the billions of shillings lent to Nakumatt.
Mr Shah says the value of the property is far much higher than the loan demanded by KCB, which he maintains was capped at Sh500 million.
“The subject security is immovable property and the applicant cannot spirit the same away neither is its value likely to diminish in a manner that would expose the respondent,” the company argues while seeking to suspend the sale.
KCB has opposed Collogne Investments’ bid to stop auction, saying that the firm has not met the threshold for the court to stop the sale and defended all the loans advanced to Nakumatt.
The bank argues that the loans were extended after a formal application, a letter of offer being made and security advanced in support.
“In any event, the applicant has not even paid the amounts it concedes as due and owing, and in the circumstances, I verily believe that this court should dismiss the application with costs,” Francis Kiranga, KCB’s lawyer, says in an affidavit.
Nakumatt closed shop in January with debts estimated at Sh30 billion -- including Sh18 billion to suppliers, Sh4 billion to commercial paper holders and the rest to banks, who are more aggressive in pursuing their unpaid loans.
Regulatory filings indicate that Nakumatt owed DTB Bank Sh3.6 billion, Standard Chartered Sh900 million, KCB Sh1.9 billion, Bank of Africa Sh328 million, UBA Sh126 million and GT Bank Sh104 million.
Mr Shah says in court papers that some lenders offered Nakumatt loans with an eye on his properties, arguing that the banks were reluctant to support its rescue plan.
“That I believe that if the facilities were not disbursed with the singular agenda of deliberately burdening the borrower beyond the point of return (sic) and therefore appropriating the applicant’s subject property then the respondent ought to have committed to the rejuvenating of the borrower’s operations,” Mr Shah argues.
Creditors of the supermarket chain on January 7 voted to wind it up after it failed to repay debts following a failed rescue attempt.
After the vote, the banks started to identify properties and bank accounts linked to Mr Shah, especially outside Kenya, with a view to seizing and recovering the billions of shillings owed to them.
The local assets include shopping malls, office blocks and prime land in Nairobi, Mombasa and Nakuru — where Atul’s father started Nakumatt as a retail shop.
The properties are owned by third parties linked to the Shah family, which holds the bulk of Nakumatt shares, according to a document prepared by the retail chain’s court-appointed administrator.
The Directorate of Criminal Investigations’ Anti-Banking Fraud Unit is also investigating Nakumatt for alleged theft and money laundering.
In its heyday, the company, which began life as Nakuru Mattresses, had more than 60 outlets across Kenya, Uganda, Tanzania and Rwanda, before it was brought down by poor management and debt-fuelled rapid expansion.
However, its financial problems led to empty shelves and store closures that eventually culminated in the demise of the once leading supermarket chain.
Foreign investors could have helped overhaul management and injected cash, but despite a swarm of suitors, no deal was made in the end.
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