Retail chain Uchumi Supermarkets has finally found a buyer for its land in Kasarani, Nairobi and was expected to sign the final deal Tuesday, offering suppliers and creditors it owes millions of shillings some hope for a settlement.
Court filings show that the troubled retailer has entered into an agreement with Jewel Complex Limited to sell the land at Sh2.8 billion and that a Sh330 million deposit has already been paid.
Uchumi, which owes suppliers over Sh3.6 billion, has been banking on the sale of the land to turn around its fortunes but the money has been slow in coming because of challenging approval processes.
The retail chain’s progress with the land deal is contained in a document that UBA Bank, one of the creditors, has filed seeking a share of the proceeds preserved by the court.
“Kasarani Mall Limited has entered into an agreement for the sale and purchase of the said land reference number 25544, Nairobi dated September 17, 2018 for the sum of Sh2,800,000,000 with Jewel Complex Limited,” Maureen Gacheru, UBA Bank’s legal officer, says in court documents.
Kasarani Mall Limited is a subsidiary of Uchumi Supermarkets through which the retail chain owns the land.
Deal closed by Nov 27
UBA claims that Jewel Complex Limited has paid a Sh330 million deposit and the deal was set to be closed by November 27.
Not much details on Jewel Complex are available but court documents show that Eliud Mwai and Raphael Mwiti signed the agreement with Kasarani Mall Limited on the company’s behalf.
Uchumi management plans to use proceeds of the sale to shore up its flagging operations and pay certain unsecured creditors at the expense of others.
UBA Bank, in an application filed in court, is seeking transfer of the Sh330 million and any further payment of Sh2.8 billion to the court for purposes of paying all creditors who are enjoined in a winding petition pending.
UBA has been seeking to dispose of Uchumi’s land situated along Nairobi’s Langata Road to settle a Sh172 million debt but the retail chain obtained orders restraining all creditors from auctioning its properties.
The bank now wants the order restraining it from disposing off the Langata land vacated, arguing that Uchumi failed to disclose that it was in the process of selling its assets when it obtained the orders.
Uchumi has, however, argued that Kasarani Mall Limited is not a debtor in the winding up petition before court because it’s a separate legal entity and that whether or not a sale of one of its assets was disclosed is therefore immaterial.
The retail chain further notes that UBA got the confidential information after it pressured Uchumi to demonstrate how the company intended to optimise its operations.
Uchumi says sale of any asset to enable the company run as a going concern or optimise the funds available to creditors is in alignment with the objectives of the Insolvency Act.
The firm has been fighting creditors to stave off an ongoing scramble for its assets.
Claims filed against the struggling retail chain in the ongoing winding up petition are approaching the Sh900 million mark after 14 more companies joined the petition.
Court records show that 20 companies have joined the case filed by Githunguri Dairy Farmers Co-operative Society, bringing the total claims filed against Uchumi so far to Sh865 million.