The board of directors of Copia Kenya have placed the beleaguered e-commerce firm in administration as they seek the preservation of the business amid recent upheavals.
The company Friday announced the hiring of Makenzi Muthusi and Julius Ngonga of consultancy firm KPMG to lead the administration process with the aim of maintaining the company as a going concern.
Administration refers to the process under which an insolvency practitioner is appointed to restructure a business by ensuring that it is a going concern with the aim of either turning it around or implementing an auction of its assets as a last resort to protect the interest of creditors.
“Copia Global, the parent company of Copia Kenya, was unable to attract capital on terms that were amenable to all existing shareholders, funders and investors. Copia Global is now winding down, leaving the Copia Kenya business in a new position to raise capital directly,” the firm said in a statement Friday.
“The administration will work with management to raise capital from new investors for the Kenya business.”
Under the watch of the administrator, Copia says it expects its local management team to implement a plan with a lower burn rate (expenses), an accelerated path to profitability and a focus on the increasingly digital consumer.
While Copia Kenya says it will seek to preserve jobs, the fintech notes the retrenchment of some staff will likely be necessary to right size the company.
Its CEO Tim Steel stated in a May 16 redundancy letter that affected employees would leave after a month in line with the required notice period.
The looming layoffs would place Copia in the same list as Twiga Foods and Kune who have previously laid off all or a substantial part of their workforce amid losses and inability to raise additional capital.
Copia was launched in 2013 with the goal of bringing e-commerce and financial services to middle and low-income households on the continent.
The company has relied on mobile technologies and a network of 30,000 local agents to reach the target market.
Administration replaced receivership which previously resulted in an immediate liquidation of a company's assets to pay creditors without first seeking to revive the business.
By going into administration, a company has a chance to regain its footing. In Kenya, the administration process is governed by the Insolvency Act, 2015.
A company or its directors can initiate the administration process alongside a court of law or a holder of a qualifying floating charge.
Administrators have powers to convene members or creditors meetings, remove and appoint a director to the office or distribute the company’s assets to the creditors.
